“Economic” category

“Created and distributed economic value” aspect

The created economic value present the main sources of the Company’s income, namely, income from electricity production, transmission and sale, as well as from the sale of coal and obtained remuneration. The created value is distributed between suppliers and contractors, employees of the Company, shareholders and lenders, the state, as well as local communities.

According to results of 2019, the created economic value amounted to 338 bln. tenge and the distributed economic value amounted to 276 bln. tenge, as a result, the undistributed economic value amounted to 62 bln. tenge. According to the approved Development Plan for 2020–2024, the created and distributed economic value is planned to be increased in 2020 and 2021.

“Innovative development and digitization” Aspect

Innovative development

Over the past decades, the world has been rapidly moving to a new type of economy, at which the introduction of innovative technologies is becoming the primary tool for its formation. In today’s environment, innovative development and digital transformation are the key agents of technological change and a condition for ensuring competitiveness both at the level of individual enterprises and at the country level, leading to the restructuring of all economic and production processes, drastic improvement of productivity, quality and reduction of prime cost.

The Company’s development strategy provides for the provision of reliable competitive supplies of energy resources in the markets where it operates through the deployment of innovative technologies that increase the efficiency and environmental friendliness of coal generation sources.

The research “Development of the technology of furnace devices for boiler units for firing high-ash coal from Ekibastuz deposit’s layer No.3 and depleted coal/coal by-products” is conducted in collaboration with Nazarbayev University. The research execution period is 2018–2020. In order to conduct research work, a joint research laboratory “Clean Coal Technologies” was established at the premises of the “Nazarbayev University Research and Innovation System” PI.

Expected outcomes:

✔ рdevelopment of technology and analysis of the prospects of the use of fluidized bed technologies for burning of highash coal;

✔ reduction of fuel consumption and air emissions compared with conventional coal combustion;

✔ complete firing of fuel, without leaving the combustion process in the gas space above the fluidized bed and the loss of significant amount of heat with unreasonably overheated flue gases.

The following works were performed in 2019:

✓ the study was conducted on an integrated installation of a fluidized bed and a circulating fluidized bed (II-FBCFB) regarding the influence of operation conditions on the efficiency of the process, the emission of nitrogen and sulfur oxides, the degree of use of the active sorbents of ash and limestone when firing ordinary Ekibastuz coal of the 3rd coal bed of gross output at atmospheric pressure in FB and CFB;

✓ the development of a gas-dynamic model of firing and gasification of Ekibastuz coal in CFB;

✓ the study was conducted on CFB gasification installation (CFB GI) regarding the influence of operating conditions on the gasification of Ekibastuz plain coal of the 3rd coal bed at atmospheric pressure in the partial air gasification mode.

✓ the study was conducted on an II-FB-CFB regarding the influence of operating conditions on the efficiency of the process, emission of nitrogen and sulfur oxides, utilization of active sorbents of ash and limestone when firing Ekibastuz coal by-products with an ash content of 60 to 80 % at atmospheric pressure in the FB and CFB;

✓ the first part of the studies was conducted on the isothermal CFB installation (II-CFB) of the external circulation of the solid phase along the furnace circuit with a cyclone and a U-shaped pneumatic valve;

✓ The first part of research was conducted on the installation of extended furnace of gasifier under superadiabatic combustion (EFGSC) and gasification of Ekibastuz highash coals and by-products with an ash content of up to 80 % at atmospheric pressure in air gasification mode.

In order to improve technical and economic indicators when firing high-ash coals at thermal power plants of the Company, the possibility of introducing the technology fuel oil free startup of boiler system (plasma-fuel system) is under consideration.

The implementation of the project will solve the following problems:

✓ stabilization of the combustion of a pulverized coal torch at reduced loads of boiler units;

✓ elimination of fuel oil consumption in the flame combustion of low-grade coals;

✓ elimination of the negative effects of co-firing of coal and fuel oil in one furnace volume, which lead to a decrease in the efficiency and reliability of the boiler.

This technology has been successfully applied in the People’s Republic of China, the Russian Federation, Indonesia, etc. at power units from 200 to 1000 MW. In order to determine the possibility of upgrading the ignition systems of Ekibastuz SDPP-1 boiler units by installing plasmatrons, a Cooperation Agreement was signed between “Samruk-Energy” JSC and “CITIC Construction” (China).

In accordance with the Plan of joint activities for the implementation of the Cooperation Agreement, the following activities were carried out over the past year:

✔ Appropriate laboratory tests of Ekibastuz coal were carried out in China, which confirmed the possibility of ignition by a plasmatron;

✔ mutual visits of the parties were arranged, so that Chinese specialists could learn more the existing infrastructure of EGRES-1 power unit and our specialists could get acquainted with the operation of plasmatrons at the existing power plan in China;

✔ a preliminary technical solution for the modernization of the ignition system of the boiler of ESDPP-1 power unit for the installation of plasmatrons was developed and considered.

It is planned to conduct corporate procedures to approve the implementation of the project after the Chinese side submits engineering results.

Digitization

Using the potential of digital technologies will allow the Company to boost productivity, safety at work and reduce the cost of production of goods and the delivery of services, which in turn will contribute to the implementation of the strategic initiative “Improving the efficiency of operations”. The Сompany aims to ensure digitization by incorporating digital principles into corporate strategy, business model, activities and culture:

1. Business orientation

Digitization initiatives should be aimed at improving the financial condition of the Company, occupational health and safety measures, reducing emissions into the environment, etc.

2. Partnerships with business

Interaction and coordination of activities within the Company and across “Samruk-Energy” JSC group of companies.

3. Search for best practices

Search, selection, initiation of innovative ideas and projects, coordination of research and development in the area of digitization across “Samruk-Energy” JSC group of companies.

4. Timely implementation of projects with agreed budget

When managing projects, ensuring compliance with deadlines, budget and scope of the project as set out in the requirements / contract. Projects should be implemented step-by-step.

5. Automation of processes

The use of automated control systems in technological processes while reducing the human factor.

Digitization tasks:

— reducing the cost of fuel and equipment maintenance by introducing digital systems and preventive equipment diagnostic systems;

— centralized monitoring of key indicators of “Samruk- Energy” JSC group of companies by centralizing services;

— reduction of the diagnostic period in case of detection of dangerous shortcomings or in case of equipment failure;

— reduction in the collection of information on production figures of “Samruk-Energy” JSC group of companies;

— the possibility of in-depth study of the data collected from the diagnostic equipment and instrumentation;

— the ability to automate production processes and data collection processes.

To achieve the mentioned objectives, a number of activities were carried out in 2019. The company studied the possibility of implementing centralized production monitoring, diagnosing the possibility of implementing predictive analytics, and conducted a survey to determine the possibilities of using Big Data to support and develop a business.

The Portfolio of the projects of the Transformation Program of “Samruk-Energy” JSC includes the Project “Implementation of Automatic Load and Frequency Control”.

The project is implemented for the first time in the EEU and is a joint project with “KEGOC” JSC, implemented as part of the state program “Digital Kazakhstan”. Thanks to ALFC, “KEGOC” JSC will be able to manage the capacity of power plants of “Samruk-Energy” JSC group within limits set, i.e. directly affect power units / hydraulic units (reduce or increase capacity) in real time when changing the circuitmode situation in the power system.

Project benefits:

1. Obtaining an additional source of income from payments for the service of balancing frequency and load from the System Operator starting from 2021;

2. Reduction of deviations in the balance of power flows on the border of the UES of Kazakhstan and the UES of Russia since 2021, as well as ensuring energy security and energy independence of the Republic of Kazakhstan.

The phase 0 “Project launch” was completed in 2019, which includes a detailed planning of the project, its formalization and informing the company’s stakeholders about the project. The development of design and estimate documentation is underway.

“Energy efficiency” Aspect

The Company’s activities in the field of energy conservation and energy efficiency are based on the methodology of ISO 50001 international standard “Energy management systems”.

The Company has the program for energy conservation and improvement of energy efficiency for 2015–2025, which aims to develop measures for wise and economically feasible use of fuel and energy resources.

A 10.5 % decrease in power consumption of the gross marketable product of “Samruk-Energy” JSC group of companies in 2025 compared to the base 2014 is the expected effect from the program implementation.

Target-oriented tools of the Program:

✓ setting targets and indicators for energy conservation and raising of energy efficiency for “Samruk- Energy” JSC group of companies;

✓ continuous monitoring of the achievement of specified targets through energy-economic analysis in line with the developed methodology for calculating key energy efficiency indicators;

✓ development, implementation and improvement of the energy management system at “Samruk- Energy” JSC group of companies;

✓ implementation of organizational and technical activities on energy conservation and energy efficiency in compliance with the approved action plans for energy conservation and energy efficiency across “Samruk- Energy” JSC group of companies;

✓ carrying out standard activities aimed at energy conservation and energy efficiency at Samruk-Energy group;

✓ Creation of an integrated system for automated metering of energy resources consumption

As part of the ongoing work on energy conservation and improvement of energy efficiency, 78 measures aimed at reduction of fuel and energy resources consumption were implemented during 2019, which allowed saving 296 thous. nd tons of standard fuel across “Samruk-Energy” JSC group of companies.

Energy consumption within the organization

According to the 2019 results, fuel consumption decreased in comparison with the previous year because of the optimization of the operation modes of power units and, accordingly, the decrease in unit fuel consumption.

The total energy consumption has a steady decline in relation to the base 2014 (17.7 mln. GJ), both in electricity consumption and in heat energy consumption. 14.0 million GJ of energy was consumed in the reporting year, including 1.3 mln. GJ from renewable energy sources.

Overall, over the years, there has been a positive trend towards an increase in energy consumption from renewable energy sources, which is because of the growth of renewable energy sources share in electricity production in the country.

Energy intensity

The volumes of consumption of fuel and energy resources within the organization, as well as volumes of electricity and heat produced, electricity transmitted and coal mined were used in this indicator.

According to the 2019 results, the energy intensity of the gross commodity product across “Samruk- Energy” JSC group of companies amounted to 29,3 t.s.f / mln.tenge and decreased by 1.3 % compared to the previous year owing to the implementation of energy conservation and improvement of energy efficiency activities.

The reduction of energy consumption

There is a trend towards decrease in total energy consumption over years in relation to base 2014 (17.7 mln. GJ)

Consumption of electricity decreased both in relation to the base (14.0 mln. GJ) and in relation to last year and amounted to 11.3 mln. GJ.

Heat consumption also decreased in relation to the base year (3.7 mln. GJ) and amounted to 2.6 mln. GJ.

The reduction in total energy consumption was driven by reduction of energy use for power plant needs.

Aspect “Materials Used”

The products of “Samruk-Energy” JSC are thermal and electric energy, as well as thermal coal. The regulation of this industry is carried out by state bodies represented by the МЕ and the Committee. The Company does not carry out any marketing communications regarding the manufactured product, including advertising and promotion.

The list of materials used at our enterprises in the manufacture of products

In the production of electricity:

In the production of heat:

For auxiliary needs in the production of both types of products:

According to the 2019 results, the distribution by types of generation (conventional, hydropower plant and renewable energy sources) is as follows:

— conventional generation accounted for 90.6 % of the total electricity generation of the group of companies,

— the share of electricity generation at “clean” RE plants and HPP amounted to 9.4 % of the total generation of “Samruk-Energy” JSC group of companies.

In 2019, the share of electricity generation at “clean” RE plants and HPP amounted to 9.5 % of the total output of “Samruk- Energy” JSC group of companies – in 2019, two hydraulic units of “Shardarinsk HPP” JSC were commissioned as part of the plant retrofit project, a 416 kW SPP was commissioned in Kapshagay by “Samruk Green Energy” LLP – this will contribute to increasing the share of “clean” generation.

“Samruk-Energy” JSC products are heat and electricity, as well as thermal coal, respectively, the requirements for environmental labeling and packaging are not applicable to manufactured products.

“Information security” aspect

The information security primary goal – protection of “Samruk- Energy” JSC data and information and the infrastructure that supporting them from any accidental or malicious influences. Any hacker attack threatens to damage both data and information, as well as its owners or supporting infrastructure.

The objective of ensuring information security set out in the Information Security Policy of the Company involves the monitoring, forecast and prevention of such impacts, as well as minimizing a damage from their occurrence. No confidential information was leaked in 2019.

Monitoring of user activities performed on personal computers showed a significant reduction of violations of “Samruk-Energy” JSC internal regulatory documentation on information security compared to previous years.

“Introduction of information security management system” project was launched in 2017 as part of Transformation Program.

With its introduction, the risks of information security threats, cyberattacks, and performance disruptions at power plants will be reduced at “Samruk-Energy” JSC and its SA, the state of the relevant infrastructure of the Company will be constantly monitored, and timely response to emerging security incidents, as well as positive result when conducting an international certification audit will be secured. The level of maturity of information security processes will be increased, which in the end will lead to a systematic approach.

The project team completed activities under Phase 0 and Phase 1 of the project in 2019. (ISMS) processes under the project and a system for preventing leakage of confidential information were implemented at “Shardarinsk HPP” JSC, “Moynak HPP” JSC and “Ekibastuz SDPP-1” LLP.

The project team will proceed to the implementation of Phase 2 of the project in February 2020 at “Samruk-Energy” JSC, “Shardarinsk HPP” JSC, “AlmatyEnergoSbyt” LLP, “Energy Solutions Center” LLP.