Nuclear Power Plant New Build Activity: A Market Overview Tim Collier Vice President Customer Relations & Sales - Asia Westinghouse Electric Company

The Need for Power and Energy Security

Asia Electricity Demand Growth Rate Net Electricity Consumption The electricity sectors of the countries in developing Asia are expected to be the fastest-growing in the world. In the region as a whole, net electricity consumption is projected to increase at an average rate of 3.7 percent per year from 2001 to 2025. The electricity sectors of the countries in developing Asia are expected to be the fastest-growing in the world. In the region as a whole, net electricity consumption is projected to increase at an average rate of 3.7 percent per year from 2001 to 2025. In China alone, the projected average growth rate for electricity demand is 4.3 percent per year. Over the next two decades, electricity demand more than doubles in the IEO2004 reference case, growing from 2,650 billion kilowatthours in 2001 to 6,274 billion kilowatthours in 2025. Much of the increase in demand is projected for the residential sector, where robust growth in personal income is expected to increase demand for newly purchased home appliances for air conditioning, refrigeration, cooking, and space and water heating. India has the second largest installed electricity capacity, next to China’s. India is expected to experience fast-paced growth in demand over the forecast, with strong economic growth of 5.2 percent per year projected between 2001 and 2025. Net electricity consumption is projected to grow by 3.3 percent per year, to 1,216 billion kilowatthours in 2025, more than double its 2001 level of 554 billion kilowatthours. Source: Energy Information Administration

Anticipated Global Demand for New Nuclear Capacity Ref: The Future of Nuclear Power An Interdisciplinary MIT Study (2003) and Westinghouse Analysis 477 200 175 The demand for future nuclear generation is likely to grow worldwide. Initiatives underway right now point to the potential for new nuclear plants in the United States, Asia and other possible opportunities in Europe There are also plans to increase China’s nuclear power capacity. As of March 2004, nine nuclear reactors were operating in China with a combined capacity of 6,199 megawatts. Two additional reactors are under construction, scheduled for completion before 2005. They will add another 2,000 megawatts of installed nuclear capacity. The government is considering another 26 nuclear units for future development, with a total combined capacity of 23,000 megawatts. In China, in addition to pursuing the new plant market, Westinghouse has been involved in a number of nuclear projects. Recently, we have provided important services to China’s existing nuclear power plants, having completed major maintenance projects at Qinshan I in 1999 and 2002 and Qinshan II in 2003. Currently, we are pursuing the new plant market with our AP1000 plant design. We submitted a bid in February to build four nuclear islands using the AP1000 design. 91 46 68 62 17 49 37 32 39

New Build Activity Where? Just about everywhere! New plants under construction or strong consideration: Canada South Africa China South Korea Czech Republic Switzerland Finland Taiwan France Turkey India U.K. Russia U.S. Vietnam Japan Indonesia As you can see, nuclear power is experiencing a rebirth also across the globe. Clearly the future is bright. However, we do have challenges. How will new plant capacity be procured, and what methodologies exist for ensuring that plant components are not only of the highest quality, but also delivered on time and within budget?

Challenge: Nuclear Power Must Be Cost-Competitive Comparative electricity generating cost projections for year 2010 Nuclear overnight construction costs ranged from US$ 1000/kW in Czech Republic to $2500/kW in Japan, and averaged $1500/kW. Coal plants were costed at $1000-1500/kW, gas plants $500-1000/kW and wind capacity $1000-1500/kW.

Westinghouse History and Strength

Reactor Vessel for Westinghouse Shippingport PWR First US Commercial Nuclear Power Plant (1957)

Westinghouse Strategic Objectives We prioritize our efforts by selecting improvement projects which have a direct relationship to the Westinghouse strategy, and to ensure customer focus, we have revised our strategy to have an outside view in our business. The 3 Strategy Thrusts are Customer Intimacy, Operational Excellence, and Technology Leadership. Customer Intimacy Customer 1st Management System Behavior Differentiation Create Success for Customers Operational Excellence World-Class EHS Flawless Execution Cost Competitiveness Technology Leadership Develop Leading Technology Solutions Westinghouse believes that if we can understand our customer’s needs and wants almost as well as they do, and then follow through by delivering products and services with high quality and reliability using leading edge technology, that our customers will be eager to do business with us. 3

Leader in Advanced Reactor Licensing 20 years ago Evolutionary ALWR reactor technology System 80+ Design Certification (DC) on May 21,1997 15 years ago Passive reactor technology AP600 DC on December 16, 1999 Extended to Generation III+ AP1000 DC December 30, 2005 Generation IV nuclear plant technology PBMR and IRIS (Pre-Application reviews underway)

Key for Success: Localization and Technology Transfer Robust ROK new build program will also help us ensure success with other new build efforts Our experience with the robust ROK new build program will also help us ensure success with other new build efforts. By working closely with Korean customers and implementing an extensive and aggressive technology transfer program, Westinghouse has been able to assist in establishing self-reliance and localization in Korea’s nuclear industry. In effect, the primary component supply chain was extended with Korea developing the capability to design, manufacture, and supply NSSS primary equipment and much of the BOP equipment for their plants. The goal of achieving 95% technical self-reliance for nuclear component design, manufacturing and procurement was met. As a result, Korean industry will be active in support of the anticipated technology transfer and component supply for the AP1000 nuclear plants anticipated for construction in China, thereby further extending the supply chain.

Westinghouse AP1000

A Historical Plant Perspective Current nuclear power plants are safe, economic and increasingly competitive Complicated systems with numerous active components Quest for improved performance and safety pursued through redundancy and diversity Operators required to take action on a relatively short time in response to plant upset conditions Numerous designs with diverse project delivery teams and equipment suppliers “Stick-build” construction and large on-site staffs

Westinghouse Passive Technology AP1000 Modular Construction Passive Safety Systems Short Engineering and Construction Schedule NRC Approves Certification of Westinghouse AP1000 Advanced Reactor Design – the only Genreation III+ design to receive such certification Innovative Design Features Westinghouse has made a significant investment in passive technology for more than 15 years and is convinced that this is the right technology for new build today. AP1000 is designed for modular construction, which helps reduce craft labor requirements at the construction site. Significant work has been done to develop a construction sequence and schedule. The AP1000 is the only Generation III+ plant to receive Design Certification US Licensing Approval Reduced Components & Commodity Components

AP1000: Simplicity and Standardization Design Safety Construction Procurement Operations Maintenance We have focused on simplicity in essentially all areas of the AP1000: design, safety, construction, procurement, and O&M. The result is a highly safe plant with an overall construction schedule of 60 months, including only 36 months from first concrete pour to fuel load. Equally important, simplification results in lower construction and O&M costs. The AP1000 has: 50% fewer valves 35% fewer safety grade pumps 80% less pipe 45% less seismic building volume 85% less cable But before construction begins, we must involve suppliers early in the process. Schedule for a Standard AP1000 Plant – 60 Months

Involve Suppliers Early in the Process To improve cost efficiencies Streamline the overall planning of the project Manage and identify global capacity, determine worldwide demand, identify gaps and implement gap closure plans Align supply strategies to the area of the world where the plant is to be built Identify customer localization requirements, reduce lead times, and continue the pursuit of qualified suppliers The AP1000, by its nature, is also supply chain friendly. With the AP1000, Westinghouse involved key suppliers early in the process to improve cost efficiencies and streamline the overall planning of the project. Additionally, we are working with suppliers to: manage and identify global capacity, determine worldwide demand, identify gaps in the supply chain and implement gap closure plans. align supply strategies to the area of the world where the plant is to be built or supported to minimize logistics complexity and improve cost effectiveness. identify customer localization requirements, reduce lead times, and continue the pursuit of qualified suppliers. The result of these efforts will be a power plant with fewer sourced components from a pool of tightly integrated suppliers and sub-suppliers. The result: A power plant with fewer sourced components from a pool of tightly integrated suppliers and sub suppliers

U.S. Market Signals Are Clear Utility Submittal Technology NuStart – TVA 2007 AP1000(2) Dominion 2007 ESBWR(1) Progress #1 2008 AP1000(2) Duke 2007 AP1000(2) Constellation 2008 EPR(1) NuStart–Entergy 2008 ESBWR(1) Entergy #2 2008 ESBWR(1) Progress #2 2008 AP1000(2) Southern 2008 AP1000(2) SCANA 2007 AP1000(2) U.S. Utilities are Overwhelmingly Choosing Passive Reactor Technology Westinghouse in discussion with other utilities on AP1000 applications

AP1000 – The Right Choice for New Build