EDF / 2018 Reference document

THE GROUP’S PERFORMANCE IN 2018 AND FINANCIAL OUTLOOK Operating and financial review

CO

2 emission rights prices

26

24

22

20

18

16

14

€/t

12

10

5.

8

6

4

2

0

Jul-18

Jul-17

Jan-18

Jan-17

Jun-18

Jun-17

Oct-18

Apr-18

Feb-18

Feb-17

Oct-17

Apr-17

Dec-18

Dec-17

Mar-18

Nov-18

Mar-17

Nov-17

Aug-18

Aug-17

May-18

May-17

Sept-18

Sept-17

CO 2 - Delivery in December Y+1 in €/t (ICE)

Fossil fuel prices (1) 5.1.2.1.4

Oil (US$/bbl)

Natural gas (€/MWhg)

Coal (US$/t)

Average price for 2018

87.0

71.7

20.9

Average price variation, 2018/2017

+18.0% +31.0% +21.9%

Highest price in 2018 Lowest price in 2018 Closing price, 2018 Closing price, 2017

100.0

86.3 50.5 53.8 66.9

27.4 16.9 20.4 18.2

72.8 85.9 90.3

Coal prices for next-year delivery in Europe stood at an average US$87.0/t in 2018, up by 18% (+US$13.3/t), although the year-end price was US$4.4/t lower than in 2017. Coal prices declined during the first quarter of 2018 (-US$13/t) due to a falling oil price and plentiful supplies in Asia, particularly in Indonesia where a change in regulations encouraged producers to focus on exports. With the recovery of oil prices and rising demand in China and India, coal prices then increased by more than US$27/t between late March and early October. After nearing the US$100/t mark on 3 October, prices saw a sharp downturn in the final quarter (-US$15/t) due to a decline in oil prices, restrictions on Chinese imports and high stocks in the Benelux ports as the low level of the river Rhine affected deliveries to German power plants. Oil prices for 2018 stood at an average US$71.7/bbl, an annual increase of 31% (+US$16.9/bbl), although the year-end price was US$13.1/bbl lower than in 2017. After falling by close to US$/8bbl in early February due to fears of a slowdown in worldwide demand in the short term, oil prices rose almost constantly from March to May as the OPEC countries respected their agreement for record limitation of oil production. Oil prices then remained stable over the summer before showing a

marked increase in September following the United States’ threats of sanctions against importers of crude oil from Iran. That rise was short-lived, and the final quarter registered a drop in oil prices (-US$29/bbl) as the sanctions against Iran were more lenient than expected, and production levels were very high in Russia and the United States. The annual gas contract for next-year delivery at the French PEG Nord hub traded at an average €20.9/MWh in 2018, nearly 22% (+€3.8/MWh) more than 2017. The year 2018 was marked by a merger between the PEG Nord and TRS zones on 1 November to form a single gas market area, PEG. During the first quarter of 2018, annual gas contract prices were generally stable. The rise principally occurred between April and September, largely driven by the oil price recovery, since long-term contracts are partly indexed on oil prices, but also by tensions over short-term stock levels which affected long-term prices. With the drop in oil prices, the final quarter saw declining gas prices (-€6.7/MWh) due to very good LNG supplies in Europe, and comfortable stock levels while the forecast was for a relatively mild winter.

Coal : average ICE prices for delivery in Europe (CIF ARA) for the next calendar year (US$/t); (1) Oil : Brent first reference crude oil barrel, IPE index (front month) (US$/barrel); Natural gas : average ICE OTC prices, for delivery starting from October of the following year in France (PEG Nord) (€/MWhg).

283

EDF I Reference Document 2018