EDF / 2019 Universal registration document

1. The Group, its strategy and activities Description of the Group’s activities

The compensation for closing the Fessenheim site defined in the compensation agreement covers the anticipated costs of closing the plant and the loss of earnings after operations cease. Compensation for the anticipated costs of closure, estimated when the agreement was concluded, vary between €370 million and €443 million depending on the payment schedule determined by the French State. An initial payment of €11 million should be received in 2020, the year in which the plant closes. One or more additional payments, scheduled at the discretion of the French State, will be made between the shutdown date and no later than four years thereafter (no later than the end of 2024). Compensation also comprises subsequent payments in compensation for any loss of earnings, i.e. income from future power generation, based on Fessenheim’s previous output figures, up until 2041, calculated "ex post" on the basis of nuclear output selling prices, including observed market prices. EnBW, EDF’s partner in the plant, will under certain conditions be entitled to a share of lost earnings in proportion to its contractual rights to the plant’s generation capacity. For its part, the Swiss company CNP decided to end its involvement in the partnership. Once EDF took note of CNP’s decision the contract between the two firms ended on 31 December 2017. 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, note 32 of the appendix to the consolidated financial statements for the fiscal year ended 31 December 2019). The final outcome of decommissioning is intended to make industrial use possible: the sites will be restored, following which the land may be reused for industrial purposes. 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 (study on the Dampierre facility), 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. There are several types of mutualisation effects: some of them relate to the fact that several reactors may share common buildings ■ and facilities on the same site, and these buildings and facilities will not have to be decommissioned twice. Structurally, decommissioning a pair of reactors on the same site costs less than decommissioning two standalone reactors on two different sites. In France, unlike other countries, there are no single reactors but sites with two or four, and in one case six reactors; certain costs are not higher when two or four reactors are decommissioned on ■ the same site. This is usually the case for surveillance costs and cost of maintaining safe operating conditions on the site; waste processing in centralised facilities (for example for dismantling major ■ components) costs less than having several waste processing facilities at the decommissioning location. There are mainly two types of learning 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. Decommissioning costs EDF nuclear power plants

Such learning effects are comparable in nature to the effects observed during construction of the fleet, in terms of studies or component 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. Learning and mutualisation effects in particular explain why it is not appropriate simply to compare the average decommissioning cost per reactor between the French fleet and other countries’ nuclear fleets. However, figures does not include the evolution of productivity and learning effect. For reasons of caution, the estimate also includes an assessment of risks and uncertainties. Third-party 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 nuclear 1.4.1.1.7 commitments (outside the operating cycle) Dedicated assets have been gradually established since 1999 to cover long-term nuclear commitments (see section 6.1 “Consolidated financial statements at 31 December 2019”, note 48.2 “Content and evaluation of dedicated assets” of the appendix to the consolidated financial statements for the fiscal year ended 31 December 2019). 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 2019”, note 48.4 “Coverage of long-term nuclear obligations” of the appendix to the consolidated financial statements for the fiscal year ended 31 December 2019). New Nuclear projects 1.4.1.2 See also section 2.2.4 “Operational Performance, risk factor 4A Management of large and complex industrial projects (including EPR)". 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. Interactions with the Nuclear safety authority (ASN) and administrative authorisations The request for application for commissioning, submitted in March 2015, has been examined once and was updated in June 2017. A file amending this request was submitted in April 2019. Following the decision to repair the penetration welds, a further update to the request for application for commissioning is scheduled for mid-2021. A full update of the impact study has also been commenced, for submission at the same time. In addition, rewording of five technical specifications for the Flamanville 3 design, dealing with imprecise aspects and risks of misinterpretation, is currently underway with the ASN. These specifications must be updated prior to the commissioning authorisation. It should be borne in mind that this procedure is not accompanied by any request to alter the installation or the terms of its operation. 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 ASN has no further technical requests relating to this matter. The next stage will be a public consultation during the first quarter of 2020: this is the first phase of the administrative process leading up to the decision to authorise partial commissioning. An application to change the commissioning deadline in the construction authorisation Decree was made to the French Ministry for Ecological and Inclusive Transition in July 2019, with additions following discussions with the Ministry in September 2019. The aim is to postpone the deadline to April 2024, as opposed to the current deadline of April 2020, in order to take into account the welding repairs, whilst leaving some flexibility.

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EDF | Universal registration document 2019

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