JP Elektroprivreda BiH d.d. – Sarajevo Project presentation District Heating of Sarajevo City and Sourounding Places from TPP Kakanj Sarajevo, May 2017 JP Elektroprivreda BiH d.d. – Sarajevo

The motives and objectives of the project The project aims to extend the network of heating energy supply areas to/from Sarajevo and Kakanj. The motive of the introduction of high-efficiency cogeneration in the product portfolio of the company to improve the environmental aspects of the production of electricity and heat. Creating conditions for the implementation of the provisions of the Directive on the energy of efficiency (Directive 2012/27/EU). The implementation of this project would lead to the reduction of CO2 emissions, the most important greenhouse gas that is emitted through the combustion of fossil fuels and other substances made up of carbon in the energy sector, one of the priority sectors of the EU strategy on adaptation to climate change. The motives and objectives of the project are: introduction of high-efficiency cogeneration in the product portfolio of the company Creating conditions for the implementation of the provisions of the Directive on the energy of efficiency (Directive 2012/27/EU). reducing CO2 emissions and other greenhouse gases extending the network of heating energy supply

Opportunities and capacity of TPP blocks Kakanj Review of opportunities and the available capacity in Kakanj in 2040 MWe MWt TPPK Block 1 - TPPK Block 2 TPPK Block 3 TPPK Block 4 TPPK Block 5 118 150 TPPK Block 6 TPPK Block 7 230 300 TPPK Block 8* 300-350 Total (dynamic) 466-580 600 Under the assumption that the version of 300 MWe and 300 MWt of unit 8 will be implemented, and that unit 7 will remain in long-term operation (up to 2040.), it is assumed that the TPP Kakanj will continuously dispose with 600 MWt power, starting from year 2018. In the meantime, it would be necessary to reconstruct the turbine separation in unit 7, for it to be ready for cogeneration. * The replacement block (η = 42%) - Technological solution in the planning stage (data according to the preliminary design - 2010) → annual index of primary energy savings> 10% (based on calculation parameters)

Opportunities and capacity of hot water pipline Automatic control operation with steering-control system. The main dispatch center: TPP Kakanj Auxiliary control room: Vogošća Heat consumption area: Visoko, Breza, Ilijas, Vogosca, Sarajevo Basic data of the hot water pipelines: Main hot water pipeline Branche hot water pipeline Route Kakanj - Sarajevo - Route via Koridor Vc Length 46 km (which 3.95 km above the ground) 39 km Power 300 MWt Dimensions DN350 – DN800 DN25 - DN700 Temperature regim 150/75°C Design temperatures -18°C Type of pipe Steel pre-insulated pipes Here we have an overview of the technical characteristics of the hot water pipelines. Thermal energy from the thermal power plant Kakanj will be ssupplied to the following cities: Visoko, Breza, Ilijas, Vogosca, Sarajevo. The main hot water pipeline will be 46 km long, and the branche hot water pipeline 39 km. The management of the complete system is provided via an automatic control of the remote heating system. Source: Google earth

The financial framework Investment costs (CAPEX) Adjusting TPP Kakanj blocks * 26.930.000,00 KM Hot water pipeline 169.827.000,00 KM Branche hot water pipelines 59.790.000,00 KM Total 229.617.000,00 KM * Treated as a separate cost of the project - a separate project. Operational costs (OPEX) Supply / heat production 24,31 KM/MWh Main and brache hot water pipelines* 11.506.000,00 KM The total investment costs amount up to 230 millions BAM, in terms of constructing the heat water pipelines from TPP Kakanj to the areas around and of Sarajevo. The following chart represents the percentage values of constructing the highway heat water pipelines and the investment expenses of constructing the branching heat water pipelines. The operating expenses (OPEX) consist of two main categories of: operating expenses while producing heating energy at TPP Kakanj, and operating expenses of the main and branching heat water pipelines. Taking into account the aforementioned expected effect while realizing the project, the price of the heating energy at the exit of the highway heat water pipeline, which justified the realization of the project, amounts to 58,84 BAM/MWh. * The average annual growth rate of the costs of 0.12%. Percentage ratio of investment costs for the construction of the main hot-water and branche hot-water pipelines Revenues Revenues * 58,84 KM/MWh * The price of heat at the entrance of the hot-water system of KJKP Toplane Sarajevo.

Environmental benefits Energy benefits The achievement of high efficiency cogeneration Increasing security of supply thermal energy Providing diversification of heat sources The release of depending on a single energy source (imported gas) Fully used local natural resources Primary energy savings in cities Improving the image of cities through the introduction of high-efficiency heating based technologies, with the contribution of energy efficiency at the regional and national level Contribution to sustainable heating system in cities Environmental benefits Improving the environmental aspects of the local and wider level: reducing particulate emissions (At the level of TPP Kakanj - measures already implemented) reduce emissions of NOx and SO2 (At the level of Kakanj - measures in the plan, from 2018 to 2027 NERP) reduction of CO2 emissions (Significant effects by replacing individual furnaces and existing boilers) The main energy benefits are listed here: Emisions CO2 - 6.328.320,91 t SO2 - 105.813,37 t NOx - 10.807,46 t PM - 1.122,81 t Environmental effects for the period 2016-2040:

Conclusions Lower price of thermal energy heat price at the point of connection to the heating network of KJKP Toplane Sarajevo, much lower than the production cost of thermal energy in KJKP Toplane Sarajevo based on imported natural gas The possibility of optimizing cost efficiency for heating The funds remain in the payment system of BiH Fully used local natural resources contribution to the development of the mines / alternative breeding fast-growing biomass contribution to the development of the biomass market (planned projects kosagorijevanja) Job creation and the development of skills of workers in the construction phase of hot water pipelines Creating conditions for the construction of a high-efficiency cogeneration of Block 8 in TE Kakanj Implementation of the project creates a framework for the development of high efficiency cogeneration in primary energy savings based on a useful heat. The project has good financial performance for a given model of financing the realization of the project at a ratio of 20% of its own funds and 80% of loan funds by applying a discount rate of 8% → NPV 48,291,090.90 KM, payback period 9 years, and the relative flexibility in terms of analysis sensitivity. Elektroprivreda BiH with this project creates the conditions for the country to comply the provisions of the Directive on the energy of efficiency (Directive 2012/27 / EU). Implementation of the project creates a framework for the development of high efficiency cogeneration in primary energy savings based on a useful heat. The project has good financial performance for a given model of financing the realization of the project at a ratio of 20% of its own funds and 80% of loan funds by applying a discount rate of 8% → NPV 48,291,090.90 KM, payback period 9 years, and the relative flexibility in terms of analysis sensitivity. Elektroprivreda BiH with this project creates the conditions for the country to comply the provisions of the Directive on the energy of efficiency (Directive 2012/27 / EU). In addition to the high financial and market efficiency, the project has a high socio-economic efficiency, because with evident immeasurable positive socio-economic effects, the project would accelerate the pace of socio-economic development (possibly lower heating costs, increase employment, etc.).

Thank you for your attention Contact details: JP Elektroprivreda BiH d.d.–Sarajevo Vilsonovo šetalište 15, Sarajevo General manager: Bajazit Jašarević Tel: +387 33 751 002 E-mail: bajazit.jasarevic@epbih.ba