EDF / 2018 Reference document

2.

RISK FACTORS AND CONTROL FRAMEWORK Dependency factors

2.3

DEPENDENCY FACTORS

The EDF group does not consider itself to be dependent on any single customer. EDF engages around 13,850 suppliers each year. The Group Purchasing Department manages EDF's purchases, excluding fuel purchases and a portion of tertiary, IT and telecommunications purchases for certain subsidiaries. This totalled more than €7 billion in orders in 2018 (excluding suppliers belonging to the EDF Group).

In 2018, EDF's top five suppliers accounted for 10.4% (17.5% in 2017 and 16.4% in 2016) of the total amount ordered by EDF (excluding fuel purchases and Group subsidiaries), and the top ten accounted for 16.4% (23.9% in 2017 and 22.5% in 2016).

Suppliers' share of EDF purchases (excluding fuel)

2018

2017

2016

Top five suppliers

10.4% 17.5% 16.4% 16.4% 23.9% 22.5%

The top ten suppliers

The difference between 2017 and 2018 is mainly due to the fact that Framatome became a subsidiary of the EDF Group on 31 December 2017. The top ten suppliers (in alphabetical order) in 2018 were: Alstom Power Service (General Electric Group), CAP GEMINI Technology services, Clemessy, ENDEL SAS (Engie Group), ONET Technologies TI, ORANO dismantling and services, SOPRA STERIA Group, SPIE Nuclear, Reel and Westinghouse Electrique France SAS. Certain suppliers and subcontractors of products or services that the Group purchases in conjunction with its operations cannot be replaced, mainly in the nuclear field and, to a lesser extent, in the fields of information technology and telecommunications for specific and secure means of transmission. EDF defines its so-called strategic suppliers through, on the one hand, their non-substitutability and, on the other hand, the volume of purchases. The EDF group has developed expertise as an architect-builder of its power generation plants and as a nuclear fuel cycle integrator, which gives EDF technical expertise that is independent of that of its suppliers. Lastly, the EDF group historically had very important commercial relations with the AREVA group, which worked on each stage of the nuclear fuel cycle and in the design, construction and maintenance of the nuclear boilers in EDF’s fleet. In France, the AREVA group was EDF’s main supplier in the nuclear sector and EDF was the AREVA’s group’s main customer. Since 31 December 2017, the activities of AREVA have been split in two: they are carried on partly by Orano, for the fuel cycle and by Framatome, a subsidiary of EDF, for the design, manufacture and maintenance of the boilers in the nuclear generation fleet. The situation of interdependency in relation to the entities of the Orano group remains today. The relationship between EDF and the Orano Group with respect to the fuel cycle is governed by multi-year contracts. For the upstream nuclear fuel cycle, all types of fuels included (see section 1.4.1.1.4 "The nuclear fuel cycle and related issues" – "The upstream cycle"), EDF relies heavily on the Orano group, which in 2018 accounted for around 34% of EDF's purchases, with Framatome accounting for 17% (compared to 52% in 2017 for the AREVA-Orano group as a whole): for its natural uranium requirements, EDF pursues a policy aimed at diversifying ■ its sources of supply in terms of origins and suppliers. The Orano Group remains an important supplier to EDF in this field; in terms of the nuclear conversion process, a significant share of EDF's ■ requirements are met by Orano, in competition with other worldwide suppliers; in the field of uranium enrichment, EDF has also diversified its supply sources and ■ now uses several major worldwide suppliers. Orano's Georges Besse II plant provides a significant share of these services (see section 1.4.1.1.4 “Nuclear fuel cycle and related issues”). for the manufacture of fuel assemblies, EDF uses two suppliers: Framatome and ■ Westinghouse. NUCLEAR FUEL CYCLE 2.3.1

For the back-end nuclear fuel cycle (see section 1.4.1.1.4 “The nuclear fuel cycle and related issues" – "The back-end cycle”), the Orano group has been appointed to perform all operations in France: spent fuel management operations (removal, immediate storage and processing) ■ are carried out in the Orano plant at The Hague. The terms and conditions for these operations, as well as the recycling of processing by-products, have been agreed for the 2008-2040 period in the EDF-Orano master agreement of 19 December 2008 and included in successive application contracts (see note 29.1.1 to the consolidated financial statements for the fiscal year ended. 31 December 2016). The contract for 2016-2023 was signed in February 2016 (see section 1.4.1.1.4 “The nuclear fuel cycle and related issues” – “Front end”); recycling, which covers the manufacture of MOX fuel, is carried out in Orano's ■ MELOX plant. AND MAINTENANCE Framatome is EDF’s main supplier of power plant construction and maintenance services. In particular, Framatome supplies nuclear boilers, their spare parts and the corresponding safety studies. In 2011, EDF signed two major contracts with Framatome, one for the production of 32 of the 44 steam generators for the 1,300MW segments, and the other for the renovation of the control-command systems for the 1,300MW reactors at the time of their third ten-year inspection. The production of the steam generators covered under the first contract is underway, although quality defects in the projects delay the installation of new components on the installations. The first installation for the second contract was undertaken in 2015, on Unit 2 of the Paluel power plant. It was completed in 2018, given the incident that occurred in March 2016 at this facility (a used steam generator fell during handling. See section 1.4.1.1.2 "Operation and technical performance of the nuclear fleet"). The renovation of the command and control systems, the subject of this contract, has since been successfully completed on the Paluel 1 and 3, Cattenom 1 and 2, and Saint Alban 1 and 2 units and is nearing completion on Flamanville 1. Moreover, a diversification programme has been under way for several years, in particular, with Westinghouse and Mitsubishi, for the replacement of certain major components of the boiler (12 of the 44 steam generators for the 1,300MW series will be provided by Westinghouse) and for maintenance services. The last 900MW (4 triplets) replacement steam generators were ordered from Mitsubishi in 2018. To prepare for the renewal of its power generation facilities, EDF has decided to use the EPR technology developed with Framatome, and has initiated construction of the Flamanville EPR power plant. In connection with this project, in 2007, EDF signed a contract with Framatome for the supply of the EPR boiler. EDF also has a relationship with the GE Group for the maintenance of certain components of its nuclear and fossil fuel-fired power plants. In addition, GE (ALSTOM) is supplying the engine room for the Flamanville 3 EPR. The goods and services that GE supplies to EDF are particularly important for the maintenance of the nuclear power plants’ turbo-generators and of certain major components of the thermal fleet. POWER PLANT DEVELOPMENT 2.3.2

136

EDF I Reference Document 2018