EDF / 2018 Reference document

THE GROUP’S PERFORMANCE IN 2018 AND FINANCIAL OUTLOOK Changes in market prices in January and February 2019

5.3

CHANGES IN MARKET PRICES IN JANUARY

AND FEBRUARY 2019

Spot prices for day-to-day electricity in France reached on average a base load price of €54.3/MWh and a peak demand price in January-February 2019 of €62.6/MWh, up respectively by €12.8/MWh and €12.9/MWh compared with the same period in 2018. This increase was driven by the surge in January (base load +€26.2/MWh vs. January 2018) when consumption increased by 5.2TWh compared with 2018 due to temperatures falling below those of January 2018 by 3.7°C. It was also due to the increase in the price of CO 2 pushing up the operating costs of thermal power plants. In contrast, base load prices in February fell by €2.1/MWh compared with 2018 due to milder temperatures in 2019, thus reducing consumption (-6.5TWh vs. February 2018). This fall was mitigated by the increase in the price of CO 2 . German spot prices settled on average at a base load price of €46.3/MWh and a peak demand price of €55.5/MWh, up respectively by €11.8/MWh and €12.8/MWh compared with January-February 2018, driven in particular by the increase in the price of CO 2 and the fall in temperatures in January. At the end of February 2019, the prices of French annual contracts for base load and peak demand deliveries in 2020 were €51.3/MWh and €66.2/MWh. A year earlier, forward electricity prices for delivery in France in 2019 closed in February at a base load price of €39.3/MWh and a peak demand price of €50.8/MWh. This increase in prices is mainly due to the increase in commodities prices, particularly that of CO 2 . Over the period January-February 2019, gas spot prices in the French market reached €20.2/MWh on average, up by €0.5/MWh compared with the January-February 2018 average price, in spite of higher storage levels this year. This slight increase masks very high variations between January and February. In January 2019, the price increased by €3.2/MWh compared with the same month in 2018. Demand was higher in 2019 due to average temperatures being below those of January 2018 by 3.7°C. In contrast, February 2019 was warmer than the same month 2018 by 4.6°C, reducing the demand for gas and thus putting downward pressure on prices (-€2.4/MWh vs. February 2018). The Brent oil price at the end of February 2019 was $66.0/bbl, a slight increase compared with the end of February 2018 (+$0.3/bbl). After an almost continuous

increase between July 2017 and September 2018, exceeding $85/bbl in early October, oil prices thereafter fell, reaching $50.5/bbl by Christmas. This decrease is due to the decline in global financial markets, fear of a glut following forecasts of a decline in global growth and thus in demand, and an increase in production in Russia and the United States. Oil prices recovered at the end of December due to cuts in production by OPEC members, in particular Saudi Arabia, and sanctions against Venezuela's oil, to again exceed $65/bbl in February. The price of coal for delivery in Europe in 2020 ended February 2019 at $80.8/t, up by $1.5/t compared to the 2019 contract closed at the end of February 2018. Following a decline between February and March 2018, due to the decline in oil prices and excess supply in Asia, the price of coal surged until September, driven by the recovery of oil prices and an increase in demand in China and India. Having reached close to the $100/t mark on 3 rd October 2018, prices declined in the last quarter following the fall in oil prices, import restrictions in China and significant stockpiles at ports in the Benelux countries. This downward trend was maintained in early 2019 due to Chinese medium-term demand being sluggish and short-term demand being lower than expected, due to a milder winter. The price of CO ² emissions certificates for delivery in December 2019 closed in February 2019 at €21.7/t against €10.1/t at the end of February 2018 for December 2018 delivery contracts. Prices witnessed a sharp increase between January and September 2018 due to the EU-ETS reform for the 2021-2030 periods, aimed at reducing the number of quotas in circulation. An increase which intensified with the return of speculators to the market. Since September, prices have been highly volatile, ranging between €15/t and €25/t depending on the progress of Brexit negotiations. Furthermore, prices were pulled downward at the end of January following Germany's coal exit commission's recommendation of a gradual phasing out of all German coal and lignite facilities, with the possibility of decommissioning starting in 2022.

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EDF I Reference Document 2018