EDF / 2018 Reference document

PRESENTATION OF EDF GROUP Description of the Group's activities

Regional anchoring in hydropower valleys EDF Hydro has always taken care to ensure the sustainable and shared development of the hydropower valleys and the economic regions close to its generation facilities. These regions, often rural and sometimes isolated, are always looking to adapt to the changes in their environment: economic, societal or even climatic. Over and above its outstanding and effective compliance with standards and regulations, EDF, as part of its development of maintenance and operation of hydropower plants, ensures that it provides support to these regions to tackle the societal and economic changes that they face. It is in this context and in order to strengthen its determination to provide local support in the vicinity of its hydropower valleys that in 2012 EDF launched a dedicated programme named “One River, One Territory”. “One River, One Territory” is a win-win local programme which, at end-2018, drew upon seven active agencies in mainland France. These agencies, created under a shared governance with local economic operators and which employ strategic actions specific to the needs of their regions, aim to integrate through and for employment, develop sustainable economic activities in the valleys, support private or public project promoters, facilitate communication among stakeholders and create or protect employment in companies in the hydropower valleys via a dedicated financing subsidiary, which has supported some forty businesses in ten years. The action of the “One River, One Territory” local agencies led to the referencing in the panel of suppliers to EDF of close to 1,000 local businesses in business lines specific to hydropower, in particular in the field of mechanical engineering. Managing access to water Water reservoirs held by EDF’s large dams in France enable the storage of 7.5 billion cubic metres of water, corresponding to 75% of national surface storage reserves. The hydropower facilities have positive effects on both economic development and the environment, and EDF applies a proactive management policy in relation to water resources, in liaison with various water stakeholders. Agreements are entered into with local authorities, farmers, fishermen, managers of tourist sites and manufacturers (see section 1.5.6.1 “General regulations that are applicable to the environment, health, hygiene and safety”). The Law of 30 December 2006 on Water and Aquatic Environments contains provisions relating to the management of water resources (in particular, the benefits of reserved flows and (1) the flexibility of hydropower plant operations). These provisions were supplemented by the statute on the reconquest of biodiversity, nature and landscapes of 8 August 2016. The EDF group nevertheless remains vigilant concerning the local implementation procedures and forthcoming developments of this regulation, and calls for more coherent public policies on water, energy and the environment. New renewable energies 1.4.1.5.2 Wind power 1.4.1.5.2.1 A wind turbine uses the action of the wind to drive rotor blades connected to an electrical generator. There are various categories: onshore wind power, a proven and increasingly competitive sector which is now ■ close to competing with, if not matching, traditional sectors in certain areas. It benefits from economic incentives in various countries, although an increasing number of projects are developed without a financial support mechanism (see section 1.5.3 “Electricity market legislation”). On average, the rated capacity of onshore wind turbines installed worldwide is more than 2MW, a figure which is

increasing steadily. The subsidiary responsible for developing wind power within the Group is EDF Renewables. The subsidiaries EDF Luminus and Edison also have wind farms in service; offshore wind power, a less mature, high-growth sector which currently requires ■ a higher initial investment and is more expensive to connect to the grid than onshore wind power and whose operation and maintenance are more difficult. The advantages of this sector are the higher rated capacity of each wind turbine (typically over 5MW) and increased productivity due to more reliable winds. The EDF group has decided to ramp up its investment in offshore wind generation which offers interesting development prospects in some of the Group’s key The operating principle of solar photovoltaic power is to convert sunlight directly into electricity. Photovoltaic solar power is used in two ways: it can either be connected to the grid, or it can generate electricity at isolated sites. Grid-connected photovoltaic systems have witnessed steady growth around the world in two markets: ground-based solar farms and rooftop installations on buildings and homes. The cost of generating solar power has fallen considerably in recent years. However, there is still considerable room for improvement, especially in the field of innovation and enhanced industrial processes. EDF R&D also conducts research on photovoltaic technology, under the aegis of the French Institute for Photovoltaic Power Research and Development (IRDEP), established in partnership with CNRS (National Centre for Scientific Research) and ENSCP (Paris National School of Chemistry). iomass and biogas 1.4.1.5.2.3 Technologies based on biomass mainly consists of burning certain types of waste, particularly from the timber and farming industries, or exploiting wood fuel forests, to produce heat or electricity. Biofuels can come from a wide range of sources. There are three different energy streams: combustion plants for plant matter (wood, agricultural waste) or animal matter; biogas generation plants (gas generated from the fermentation of organic animal or plant matter); household waste incineration plants. Lastly, through its holdings, the Group owns shares in France (notably through its subsidiary Dalkia, see section 1.4.6.1.1 “Dalkia”), and abroad in several dozen heating networks and small-scale, mainly wood-fired generating plants. Geothermal energy 1.4.1.5.2.4 The temperature of the rocks in the earth’s crust increases with depth (3°C on average every 100 metres). In some regions, geothermal energy reaches the surface in the form of hot springs, water or steam. The hot water is used directly in the form of heat: central heating in homes or heating of greenhouses. Steam extracted from the ground is also used to generate electricity: as in a classic thermal power station, it drives a turbine. It is also possible to use hot and dry rocks as a source of electricity production from steam. To develop this type of energy, EDF has joined forces with several partners (including ÉS and German energy companies) as part of a European consortium that develops and operates a prototype geothermal power plant in the hot, naturally fractured crystalline rock around Soultz in Alsace. France also has high-temperature resources located in its overseas territories. The EDF group is present in this activity mainly through its minority stake in the Company Géothermie Bouillante in Guadeloupe. countries including France and the United Kingdom. Solar photovoltaic power 1.4.1.5.2.2

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Minimum flow maintained downstream of dams to protect aquatic life. (1)

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EDF I Reference Document 2018