EDF / 2020 Universal Registration Document

2 RISK FACTORS AND CONTROL FRAMEWORK Risks to which the Group is exposed The Group cannot guarantee that in countries where it operates nuclear facilities, the maximum liability set by law will not be increased or cancelled. For example, the protocols amending the Paris Convention and the Brussels Convention, not yet in force, provide for these maximum amounts to be increased and a substantial expansion of the damage to be covered. The operator’s liability in France amounts to €700 million in the event of a nuclear accident in a facility and €80 million in the event of a nuclear accident during transport. The entry into force of the other changes laid out in these protocols is likely to increase yet again the cost of insurance and the Group cannot guarantee that insurance covering this liability will always be available or that it will always be able to maintain such insurance. Insurance coverage for the Group’s nuclear operator’s civil liability and for the transport of nuclear substances is described in section 2.1.2.6 “Insurance”. Property damage to EDF’s nuclear facilities is covered by insurance programmes (see section 2.1.2.6 “Insurance”). Despite this cover, any event that may cause significant damage to a nuclear facility of the Group could have an adverse impact on the Group’s business and financial position. Lastly, the Group cannot guarantee that the insurers that cover both its liability as a nuclear plant operator and property damage to its facilities will always have available capacity or that the costs of cover will not significantly increase, particularly in light of the impacts on the insurance market of events such as the nuclear accident in Japan that occurred in March 2011. In view of these risks, and in application of Group policy, each Group company operating nuclear facilities acts within the framework of legal and regulatory requirements specific to the country in which it operates and is obliged to comply with them. Each one ensures the nuclear safety of its facilities and constantly improves the level, based on its methods, skills and values. The Group develops common principles aiming to obtain the best level of prevention of incidents and protection of workers, the public and the environment. These principles apply to all stages of the activity, both for new projects and for the existing fleets. The Group closely involves its industrial partners with the achievement of these objectives. Each company is responsible for the proper conduct of its nuclear activities and sets the appropriate delegations at each decision and action level. The Group guarantees the allocation of the necessary resources for nuclear safety. An internal entity in charge of an independent safety evaluation is put in place at the level of each site, each company and of the Group. Each one reports to the manager concerned, independently of other managerial functions; furthermore, each one has the duty to alert the superior hierarchical level if the reaction of the level directly involved is not what is expected. The Group’s nuclear operating companies regularly receive international evaluation teams (WANO Peer Review (1) and OSART from the AIEA (2) ). Clear and honest communication on the events and their possible impacts are promoted within the Group. This high-quality dialogue is sought and maintained with the salaried personnel and its representatives, subcontractors, the supervisory authorities (Nuclear Safety Authority in France, Office for Nuclear Regulation in the United Kingdom), local communities and all other stakeholders in nuclear safety. The Nuclear Safety Council, which the Chairman and CEO of EDF chairs, meets several times a year and periodically reviews the annual assessment of nuclear safety for the EDF group. A General Inspector for nuclear safety and radiation protection (IGSNR) is appointed by the Chairman and CEO to whom he/she reports. He/she carries out inspection missions on all of the nuclear activities of the EDF group. Each year, it gives an opinion on safety within EDF. Its report is presented and debated in the Nuclear Safety Council. It is then made public (see section 1.4.1.1.4.3).

5D – Control of the fuel cycle.

In addition to the control of nuclear safety (risk 5C), the operation of existing nuclear facilities (risk 5A) and new nuclear projects (risk 4A), the Group is exposed, in the context of nuclear activities, to the control of the nuclear fuel cycle.

Criticality in view of the control actions undertaken: Intermediate. The Group’s operating costs include nuclear fuel purchases. EDF is supplied with uranium, conversion and enrichment services, fuel assembly supplies and spent fuel reprocessing operations for its nuclear fleet in France and the United Kingdom. Prices and volumes are subject to fluctuations that depend on factors beyond the Group’s control, including political and economic factors (in particular, profitability outlook for mining investments, supply/demand imbalance or tension on the supply side, associated, for example, with the occurrence of an operating incident in a uranium mine or cycle plant, a delay in the commissioning of a new mine or an event leading to institutional instability in a producing country, or restrictions/sanctions/embargos). The storage and transport of new or spent nuclear fuel is an industrial activity that requires specific safety and security measures. These requirements could become more stringent, generating additional difficulties and costs for the Group. In the event of the collapse of this industrial logistics system, the Group could reduce or even interrupt all or part of the electricity generation at the affected sites, either due to the non-delivery of new assemblies or to the saturation of intermediate storage facilities, which could have a negative impact on the Group’s financial position (see section 1.4.1.1.2.3 “The challenges specific to the nuclear activity”). Despite the project to build a large-capacity spent fuel storage pool (see section 1.4.1.1.2.3 “The challenges specific to the nuclear activity”), the risk of the impossibility, in the long term, of implementing multi-recycling in its 3rd generation pressurised water reactors or recycling in fourth generation reactors known as “GEN IV” (abandonment of the ASTRID fast neutron reactor project), could call into question the fuel cycle, with consequences both in terms of operation and in financial terms. In France, EDF has booked provisions for spent nuclear fuel management operations (transport, processing, conditioning for recycling) (see note 15 of the appendix to the consolidated financial statements for the fiscal year ended 31 December 2020) based on the price and volume conditions of the master agreement signed with Orano in December 2008 and broken down in the successive implementation agreements. The implementation agreement for the period from 2016-2023 was signed in February 2016 (see section 1.4.1.1.2.3 “The challenges specific to the nuclear activity”). The amount of provisions currently booked to cover the period not covered by the current agreement should be reassessed if the terms under which this agreement is renewed prove more onerous than those currently applicable. Note 15.1.1.5 “Inflation rate, discount rate and analyses of sensitivity” and note 15.1 “Nuclear provisions in France” of the appendix to the consolidated financial statements as of 31 December 2020 show the connection between “costs based on year-end economic conditions”, which represent estimated amounts as at 31 December 2020, and “provisions made at present value”. As regards spent fuel management, pursuant to law of 28 June 2006, the costs based on year-end economic conditions are estimated at €18,998 million and the corresponding provision is €10,246 million. However, the Group cannot guarantee that its contracts, in France and abroad, will completely protect it from sudden or significant price increases. The Group cannot guarantee that when these long-term contracts expire, it will be able to renew them, in particular at an equivalent price. This could have an adverse impact on the Group’s financial position.

(1) WANO: World Association of Nuclear Operators. (2) OSART: Operational Safety Analysis Review Team, International Atomic Energy Agency (IAEA).

126

www.edf.fr

EDF - UNIVERSAL REGISTRATION DOCUMENT 2020