EDF / 2018 Reference document

PRESENTATION OF EDF GROUP Description of the Group's activities

estimation of the risk of deferral of delivery (COD) at 15 months for Unit 1 and ■ 9 months for Unit 2. The materialisation of this risk would entail an additional potential cost of around £0.7 billion in 2015 sterling. Under this assumption, the IRR for EDF would be around 8.2% (2) . Regarding the overall schedule, the project teams are fully mobilised and are implementing action plans to ensure that the objective set to deliver Unit 1 by the end of 2025 is fulfilled. The agreements between EDF and CGN include a capped compensation mechanism in case of cost overruns or delays; these agreements are subject to a confidentiality clause. Progress of the project At the end of 2018, the project confirmed the “J0” target set for mid-2019 and has achieved the four goals set for 2018: 1 st project goal: Unit 1 pre-stressing gallery construction has been completed; ■ work on Unit 2 is underway; 2 nd project goal: Unit 1 “deep dig” has been built; it will contain the 54m tall ■ water pumping station; 3 rd project goal: the design package for Unit 1 Nuclear Island Common Raft has ■ been handed over, which enables to start work on site; 4 th project goal: pour of the first safety concrete for the Unit 1 Nuclear Island is ■ complete. The ONR's prior approval was required for this phase, to release the hold point for the first nuclear island concrete pour. Approval was granted on 8 November 2018 following the freeze of the final design. At end 2018, the expenditure to date for the project as a whole stood at £6.8 billion (at current values), excluding interim interest. Work is ongoing to identify opportunities arising from the action plans referred to above. Exchanges with the UK office for nuclear safety and regulation (ONR) Discussions with the ONR are ongoing. Next ONR Hold Point will be the delivery of fuel on site. In addition, an agreement from ONR will be needed for the despatch of the first components coming from Framatome. Contract for Difference (CfD) (5) Regarding the risks identified in the deferral of delivery (15 months for Unit 1 and 9 months for Unit 2), these are below the deadlines set out in the signed contract. The HPC project company, NNB Generation company (HPC) Limited and the Department of Energy and Climate Change (DECC) have agreed, on October 2015, on the full terms of the CfD for HPC, which was approved by the European Commission in October 2014. The CfD was signed on 29 September 2016 alongside all the other contracts with the UK Government and it is a contract to provide security in respect of revenues generated from electricity produced and sold by HPC through compensation based on the difference between the Strike Price and the market price, for a period of 35 years from commissioning. From the plant’s start date, if the reference price at which the generator sells electricity on the market is lower than the strike price set under the terms of the contract, the generator will receive an additional payment. If the reference price is higher than the strike price, the generator will be liable for the difference.

Over and above its own generation, EDF Energy also sources electricity through export power supplied from power purchase agreements which are mainly with renewable and CHP generators. In 2018, EDF Energy acquired approximately 4.5TWh through this channel. For delivery in 2018, EDF Energy’s net position on the wholesale market was a sale of approximately 17.4TWh (including structured trades). In 2018, EDF Energy sold approximately 49.3TWh and bought 32.0TWh. emissions rights are entered by EDF Energy to hedge the requirements of its power plants and gas consumers. Purchases are based on coal and gas asset generation forecasts and target coal stock levels. In 2018 29% of EDF Energy’s coal deliveries were from domestic suppliers and 71% from international suppliers. Nuclear New Build business 1.4.5.1.2.4 New Nuclear activity Following the final investment decision (FID) made by EDF’s Board of Directors on 28 July 2016, EDF and China General Nuclear Power Corporation (CGN) signed final contracts for the construction of two EPR reactors on Hinkley Point site in Somerset (“Hinkley Point C” or “HPC” project). The agreement also included a partnership for the development in the UK of two nuclear power plants at Sizewell in Suffolk (“Sizewell C” project) and Bradwell in Essex (“Bradwell B” project). The EPR technology is already being deployed at the power stations at Flamanville in France (currently under construction and fully owned by EDF - see section 1.4.1.2.1 “Flamanville 3 EPR project”) and at Taishan in China (see section 1.4.1.2.2 “Other "New Nuclear" projects - Taishan EPR”). Using the same technology, although adapted for UK regulatory requirements and Hinkley Point C site specifics, will enable to benefit from a series effect on standardisation of design, on construction and on operation. Hinkley Point C (HPC) Financing EDF’s share in HPC is 66.5% and CGN’s share is 33.5%. EDF intends to remain the majority shareholder, and has agreed with the British Government not to sell down its control of HPC during the construction period without the previous approval of the British Government. Project Costs and Timeline Following the final investment decision in September 2016, EDF has undertaken in 2017 a review of the costs and timeline of HPC project, concluded as follows (1) : confirmation of the “J0” milestone, corresponding to completion of pouring of ■ the first safety concrete for the Common Raft on Unit 1 and scheduled for mid-2019; estimation of project completion costs at £19.6 billion real terms in 2015 ■ sterling, with an increase of £1.5 billion in 2015 sterling (2) compared to previous evaluations. This estimate assumes successful operational action plans, in particular those in partnership with suppliers. The estimated additional costs (3) result mainly from a better understanding of the design adapted to the requirements of the British regulators, the volume and sequencing of work on site and the gradual implementation of supplier contracts. EDF's projected rate of return (IRR) is estimated at approximately 8.5% (4) , compared to about 9% (2) initially; Gas, coal and carbon rights procurement Coal and gas contracts (physical and financial) and CO 2

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Please refer to the press release of 3 July 2017 “Clarifications on Hinkley Point C project”. (1) Excluding interim interest and the currency effect compared with a benchmark project exchange rate (£1 = €1.23). (2) Net of action plans. (3) IRR calculated at the July 2017 exchange rate (£1 = €1.16). Any changes to the exchange rate could affect the IRR. The exchange rate at 31 December 2018 was €1.12. (4) Terms of the contract are available on the UK government website: https://www.gov.uk/government/publications/hinkley-point-c-documents. (5)

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EDF I Reference Document 2018