1.5. Strategy and Prospects of Development

The development strategy of Unipro PJSC is aimed at maximising shareholder value while ensuring that generating equipment has a high level of reliability and ensuring strict compliance with OHS standards.

Strategic Goals of Unipro PJSC

To improve the efficiency and reliability of existing generating equipment, including the modernisation / decommissioning of power units that are not in demand in the market

To improve health and safety systems

To stimulate the demand for electricity and heat power in the areas surrounding the Company’s high-performance power plants; to sell byproducts (steam, CO2, etc.)

To enter energy service markets in Russia and CIS countries

To implement the Company’s business priorities in 2018:

Priority Tasks

Compliance

To finish the repair of the boiler in Power Unit No. 3 at Berezovskaya GRES in 2019

Substantial progress has been made with the repair of the boiler in Power Unit No. 3 at Berezovskaya GRES.

The commissioning of the power unit is expected by the end of 2019 (details).

To prepare for the modernisation of generating capacities in anticipation of the planned Russian Government Modernisation Programme

Unipro PJSC has worked out different options to participate in auctions for the selection of projects to modernise generating equipment in accordance with the programme which the Government of the Russian Federation is planning to introduce in 2019.

Technical parameters for the modernisation have been determined, and conditional groups of delivery point clusters have been registered to be put forward for selection.

The decision on the strategy for participation in the selection will be made following the analysis of regulatory acts governing the rules and procedure for selection*.

To improve the operational efficiency of power units which are not included in the modernisation programme

The design has been completed, the equipment has been purchased and the site has been prepared for the construction of a heating boiler at Smolenskaya GRES branch. The boiler house is expected to be commissioned in the fourth quarter of 2019.

Implementing the project will reduce the amount of equipment being operated at Smolenskaya GRES during periods when the power units are being used to generate heat, but electricity prices do not support break-even operation in the day-ahead market.

In 2018, certification tests were performed and the installed capacity of Shaturskaya GRES Power Unit No. 7 increased by 6.6 MW starting from 1 January 2019.

To prepare and implement projects for entering the energy service markets of Russia and the CIS countries

The project on technical consulting of the generating company in the Republic of Kazakhstan has been completed.

The project has allowed to deepen the knowledge of the energy market of Kazakhstan, to develop internal competencies in the field of consulting and energy services. Unipro PJSC plans to continue work in this area.

To assist the development of agro-industrial clusters in the territories adjacent to thermal power plants

An agreement was reached with the investor and a memorandum of understanding and signed on a working partnership for the construction of an advanced wheat-processing factory (150,000 tonnes per annum).

The greenhouse construction project attracted one of the largest industry investors in the Russian Federation — “Greenhouse Growth Technologies”*.

In 2018, the Siberia Agro-Industrial Park project was included in the Yenisei Siberia complex investment project, based on Decree of the President of the Russian Federation No. Pr-228 dated 7 February 2018 and Order of the Governor of the Krasnoyarsk Territory No. 730-rg dated 29 December 2018.

An agreement was reached with the Research Institute of Finance of the Ministry of Finance of Russia to join the Krasnoyarsk Territory in its efforts to prepare a proposal to establish a territory of advanced socio-economic development (TASED) in the Sharypovsky district.

Prospects for Company development

Unipro PJSC key development plans involve increasing the efficiency and reliability of plant equipment, participating in competitive selections modernisation projects for generation units of thermal power plants, attracting investments in agro-industrial cluster development projects in the Sharypovsky district of the Krasnoyarsk Territory near Berezovskaya GRES, as well as developing the energy service business.

Business model

Unipro PJSC manages five generating power plants and purchases fuel, material and technical resources, as well as services for construction, installation and repair work the plants need in order to operate.

Electric power is generated during standard operating activity at the plants, which is sold in the wholesale electricity and capacity market across several sectors that are governed by different terms of transaction and delivery terms.

Revenue from sales of electric power and capacity is 97.6% of the Company’s total revenue. The Company’s auxiliary activity is the production and sale of heat. Moreover, the Company operates in several other business areas, through equity investment in commercial and non-profit organisations.