EDF / 2019 Universal registration document

1. The Group, its strategy and activities Legislative and regulatory environment

Self-consumption of electricity Article 119 of Law no. 2015-992 of 17 August 2015 on Energy Transition for Green Growth authorised the Government to take, by way of an order, the necessary measures to ensure the controlled and secure development of facilities intended to consume all or some their own electrical output. Following Order no. 2016-1019 of 27 July 2016 on the self-consumption of electricity came the publication of Articles L. 315-1 to L. 315-8 of the French Energy Code on 28 July 2016, which were ratified and completed by the Law of 24 February 2017 and distinguish between individual and collective self-consumption and in particular: require network operators to facilitate self-consumption operations, to implement ■ the necessary technical and contractual arrangements, particularly with regards to the metering of electricity and to enable the realisation of self-consumption operations under transparent and non-discriminatory conditions; provide that the CRE establish special tariffs for public distribution networks for ■ consumers participating in self-consumption operations when the installed capacity of generation facilities supplying them is less than 100 kilowatts. The provisions of Decree no. 2017-676 of 28 April 2017 amending the French Energy Code specify the conditions for applying these provisions, particularly with regards to collective self-consumption (no measurement used to qualify self-consumption, procedures for assessing the 100kW threshold provided for by law for the eligibility of TURPE “self-consumption” facilities to be defined by the CRE, general principles of distributing generation between each consumer participating in a collective self-consumption operation, link between the legal entity responsible for a collective self-consumption operation and the public distribution network managers, maximum capacity of the generation facilities eligible for derogation from the obligation to be attached to a balance group, which is set in the decree at 3kW). On 15 February 2018 the CRE gave its decision presenting its recommendations and opinion on matters relating to self-consumption. In its decision of 7 June 2018, the CRE set the TURPE (Tariff for using the public transmission network) for collective self-consumption. The “Pacte” business reform law no. 2019-486 of 22 May 2019 has modified the scope of collective self-consumption for a 5-year experimental phase. The scope is now defined according to criteria, particularly geographical criteria, defined in an order published after consulting the CRE. However, the continued application of these experimental provisions could be undermined by the provisions of Article 40 of the Energy and Climate Law no. 2019-1147 of 8 November 2019, codified in Article L. 315-2 of the French Energy Code, which further modifies the definition of collective self-consumption and limits its scope to operations located “in the same building, including residential buildings”, while qualifying as “extended” collective self-consumption operations that were previously included in the definition under the Pacte law. The Energy and Climate Law does not reproduce the experimental nature of those “extended” operations provided for in the Pacte law. Renewable energy communities Transposing into French law Directive 2018/2001 of 11 December 2018 on the promotion of the use of energy from renewable sources, Article 40 of the Law introduces the concept of a “renewable energy community” (“REC”) into the French Energy Code in Articles L. 211-3-2 and L. 211-3-3. A renewable energy community is an autonomous legal entity: which is based on open and voluntary participation; ■ which is effectively controlled by shareholders or members that are located in the ■ proximity of the renewable energy projects that are owned and developed by that legal entity. Its shareholders or members are natural persons, SMEs or local authorities, or their groupings; the primary purpose of which is to provide environmental, economic or social ■ community benefits for its shareholders or members or for the local areas where it operates, rather than financial profits. The Law also specifies that renewable energy communities are authorised to: generate, consume, store and sell renewable energy, including through ■ renewables power purchase agreements; share, within the renewable energy community, renewable energy that is ■ produced by the production units owned by that renewable energy community; access all suitable energy markets both directly or through aggregation. ■

The Law of 17 August 2015 on Energy Transition for Green Growth has adapted the capacity mechanism to small players allowing LDCs to transfer their capacity obligations, no longer just to other LDCs but “to any other supplier” and allowing electricity suppliers to transfer their capacity obligations to a final consumer for its consumption or to a public network operator for its losses (Article L. 335-5 of the French Energy Code). Moreover, Article L. 335-3 of the French Energy Code introduced the possibility for all capacity operators to transfer to a third party their liability for discrepancies between effective capacity and certified capacity, and the payment of the penalties in respect of said discrepancies. On 13 November 2015, the European Commission opened an in-depth investigation in light of European rules on State aids, with respect to the planned French capacity mechanism. On 8 November 2016, the European Commission approved French plans for a capacity mechanism. During the investigation, France agreed to amend the mechanism as follows: introduction of long-term contracts (7 years) for new capacities, taking into account foreign capacities and measures to prevent any manipulation of the market. Revisions made for the improvement of market transparency and surveillance led to the publication of the Order of 29 November 2016 amended by the Order of 12 October 2018. This made it possible for the mechanism to enter into force on 1 January 2017. Over-the-counter transactions remain possible. The implementation of the commitments concerning the opening of the mechanism to foreign capacity providers and long-term contracts requires a revision of the 2012 Decree, adopted in 2012 by the Council of State after reviewing the opinions delivered by the Higher Energy Council, the National Council for Standards Assessment, the Energy Regulation Commission and the Competition Authority. Decree no. 2018-997 of 15 November 2018 on the required capacity mechanism in the electricity sector provides for the explicit inclusion of some cross-border contributions to France’s security of supply of electricity as well as the setting up of a multi-year contractual system for new capacity. Electricity load shedding The Law of 17 August 2015 on Energy Transition for Green Growth amended the legal rules on load shedding and, in particular, Articles L. 271-1 et seq. of the French Energy Code on this subject. These provisions amend the previous legal rules and stipulate, in particular: that load shedding is defined as “the action to reduce temporarily the effective ■ withdrawal level of electricity from the public electricity supply and distribution networks by one or more consumption sites, compared to a forward-looking consumption plan or an estimated consumption, when an ad hoc request is sent to one or more final consumers by a load manager or an electricity supplier”; that there is the possibility for consumers to monetise each of their demand ■ responses, either vis-à-vis their supplier as part of a demand response offer that is inseparable from the supply, or via the intermediary of load managers; that the Government will organise calls for tenders if the load management ■ capacities do not meet the targets of the multi-year energy programme (this mechanism replaces that of the load shedding premium); finally, for load shedding that leads to significant energy savings, the law ■ provides that the administrative authority may require the payment to the supplier as provided for in Article L. 271-3 of the French Energy Code to be shared between the load manager and RTE. The terms and conditions for applying these provisions are specified in Articles R. 271-1 et seq. of the French Energy Code, last completed by Decree no. 2017-437 of 29 March 2017 and by the latest rules for valuing the demand response on the wholesale energy markets (known as the “NEBEF 3.2” rules) approved by the CRE on 24 July 2019 and effective as of 1 September 2019 and the rules concerning scheduling, the balancing mechanism and the recovery of balancing charges, in their version approved by a decision of the CRE of 24 July 2019 and effective as of 1 September 2019.

87

EDF | Universal registration document 2019