EDF / 2018 Reference document

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PRESENTATION OF EDF GROUP Description of the Group's activities

Decommissioning costs EDF nuclear power plants

However, figures include only very marginally the evolution of productivity and series effect. External audit conducted by the DGEC on the dismantling cost of the operating fleet had considered that series effect taken into account in the estimate was conservative. The estimate also includes, by caution, an assessment on risks and uncertainties. facilities: La Hague (Orano) and Phénix (CEA) As the responsibility for the decommissioning of facilities is incumbent on their operator, EDF wished to free itself financially from these operations. As such, the agreements signed with Orano in July 2010 and the CEA in late 2008 clarified the financial responsibilities of the parties. Following a cash payment, EDF was released from any obligation to finance the decommissioning of the Phénix facilities, which have been shut down, and the La Hague plant. Assets available to cover long-term 1.4.1.1.7 nuclear commitments (outside the operating cycle) Dedicated assets have been gradually established 1999 to cover long-term nuclear commitments (see section 6.1 “EDF’s “Consolidated financial statements”, note 45.2 “Content and evaluation of dedicated assets” to the consolidated financial statements for the fiscal year ended 31 December 2018). Article L. 594 of the French Environment Code and its implementing regulation specified which liabilities are not associated with the operating cycle and must therefore be covered by dedicated assets (see section 6.1 “Consolidated financial statements at 31 December 2018”, note 45.4 “Updated cost of long-term nuclear commitments” to the consolidated financial statements for the fiscal year ended 31 December 2018). New Nuclear projects 1.4.1.2 See also section 2.1.5 “Specific risks related to the Group’s nuclear activities”, the risk factor called “Description 5D: in addition to the risks related to the control of complex projects (4A risk factor), the success of EPR projects depends on specific factors of an industrial, regulatory and financial nature”. Flamanville 3 EPR project 1.4.1.2.1 EDF is both the owner and manager of the Flamanville 3 EPR (European Pressurised water Reactor) project. nteractions with the Nuclear safety authority (ASN) and administrative authorisations The examination of the application for commissioning, submitted in March 2015, is into its final phase with the ASN. The three expert Committees mandated by the ASN help bring together all of the technical requirements the EPR must satisfy. A permanent experts’ group met at the end of the 1 st half of 2018 and issued a favourable opinion on the demonstration of safety in view of authorizing the commissioning of the facility. However, this commissioning is subject to the examination of the welds of the main secondary circuit, the findings of the start-up tests and the granting of the Safety Certificate for the boiler's ESPN (1) . The partial commissioning authorisation decision relating to the conduct of hot functional tests has been issued by the ASN. The Decree on emissions has also been updated, which will reduce the site's environmental footprint. The request for authorisation for a partial commissioning in order to allow the reception of fuel on site, is under final examination by the ASN. The related draft decision should be submitted for public consultation in the first half of 2019. On 9 October 2018, EDF sent the Application for authorisation to operate to the DGEC (the French government's department for energy and climate change).

Since the beginning of operations at its power plants, EDF has made provisions to cover decommissioning operations, engineering, monitoring and maintenance of facilities, and site security (see section 6.1 “Consolidated financial statements at 31 December 2017”, notes 29.1.3 and 29.1.5 to the consolidated financial statements for the year ended 31 December 2017). The aim of decommissioning is to return sites and land to a state suitable for industrial use. EDF continues to reinforce its analyses through international intercomparisons while making sure to take account of certain elements that could distort direct comparisons such as differences in the estimate scopes or national and regulatory contexts. The cost estimate for the dismantling of second-generation power plants (Gen II – PWR plants in operation) was revised in 2016 to take into account both the recommendations of the audit mandated by the DGEC (the French government's department for energy and climate change) on the decommissioning costs of PWRs, conducted between July 2014 and August 2015 on the basis of the “DA09” model, and the feedback gathered from the decommissioning of first-generation power plants (Gen I – in particular the Chooz A plant). Reviewing these cost estimates consisted in implementing a detailed analytical process, identifying all the engineering, work, operation and waste treatment costs linked to future decommissioning of units currently operated. It resulted in figures based on detailed plant decommissioning feedback. This implemented process allowed to deepen the assessment of the costs specific to leading models and of the series and pooling impacts, those costs and impacts being indeed inherent to the size and the design of the fleet. The results of this detailed process led at 31 December 2016, to a decrease in the provision for decommissioning of € 2016 451 million and an increase in the provision for long-term management of ILW-LL waste of € 2016 162 million (see note 29.1 to the consolidated financial statements as at 31 December 2017). The nature of main pooling and series effects selected when calculating the estimates are presented hereafter. There are different types of pooling effects: some of them are linked to the affectation of common buildings and facilities to ■ the operation of several reactors on a same location, and therefore these buildings and facilities will not have to be dismantled twice. Thus, structurally, the dismantling of a couple of reactors on a same location costs less than the dismantling of two single reactors on two different sites. In France, unlike in the other countries, there is no isolated reactor but locations with two, four and in one case six reactors; some costs are not higher if you dismantle 2 or 4 reactors on a same site. It is ■ usually the case for surveillance costs and costs incurred by keeping the site in safe operating conditions; waste processing in centralised facilities (for example for the cutting of major ■ components) is cheaper than multiple processing facilities on the dismantling sites. There are mainly two types of series effects: a first effect comes from the fact that on a fleet driven by a single technology, a ■ large amount of the studies does not need to be performed again each time; a second effect comes from the fact that on a fleet driven by a single technology, ■ robots and tooling can be largely reused from one site to another. Such series effects have the same nature than those observed during the construction of the fleet, in terms of studies or of components manufacturing plants. As an example, for the 900MW fleet, a series effect of approximately 20% is expected on an average 2 units reactor in comparison to a 2 units leading model. Due to series and pooling series effects in particular, a simple comparison of the average dismantling cost by reactor between the French fleet and other countries’ nuclear fleet is not relevant.

Nuclear pressure equipment. (1)

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I Reference Document 2018