EDF / 2020 Universal Registration Document

1 THE GROUP, ITS STRATEGY AND ACTIVITIES Description of the Group’s activities A vast logistics operation was triggered to secure the recovery of industrial installations, the safety of third parties, and support for staff and their families. This enabled the least-affected plants to resume production less than a week after the floods. A support campaign for the local populations and employees was also implemented (1) . By the end of 2020, nine plants had become operational again, while five others were still shut down, including the Roquebillière power plant, which was totally destroyed. Hydropower safety 1.4.1.3.1.3 Hydropower safety comprises all the measures taken when designing and operating hydropower plants to reduce risks and hazards to people and property associated with water and the presence or operation of facilities. Hydropower safety is the major and permanent concern of the producer (see section 2.2.4 “Operational Performance”, risk factor “4B, impact on hydro power safety”). It involves three main activities: the management of operational risks, by providing information to users (communication campaigns, information of the employees operating on waterways, hiring “hydro-guides” during the summer months) about changes to water levels or flow fluctuations in downstream waterways; the management of facilities during periods of exceptionally high water levels, in order to ensure safety at the facilities and for the surrounding communities; measures to address the major risk associated with dam or reservoir failures, through the regular monitoring and maintenance of facilities under the supervision of public authorities. Of the largest dams, 67 of them are subject to a special administrative procedure (“Special Intervention Plan”) implemented by the relevant prefect. EDF performs regular monitoring and maintenance of dams, in particular by means of continuous structural health monitoring. Furthermore, for each of the 240 class A and B dams, a danger study is conducted every ten or fifteen years (for one class A dam and one class B dam respectively). These studies consolidate an overview of the structures and associated countermeasures forming part of a risk mitigation procedure (2) , and include complete assessments, carried out using underwater equipment or by emptying the reservoir. These operations are carried out under the strict supervision of public authorities. Regulatory notice Articles R. 214-112 et seq . of the French Environment Code contain provisions that are applicable to the safety and security of hydropower facilities that are authorised and operated under concession contracts. Dams are divided into three classes (A, B and C) according to their characteristics, in particular their height and the volume of the floodwaters. According to this classification and the legal rules applicable to the facility, the regulations require the operator or concession contract holder to fulfil a certain number of obligations in order to guarantee the safety and security thereof. Hydropower generation issues 1.4.1.3.1.4 Hydro power is a key component in energy transition, due both to the low-carbon nature of output and to its flexibility and storage capacity, which outperforms other energy storage solutions by far. The PPE set ambitious goals for the development of hydroelectric power in France, aiming for +1GW of gravity capacity and +1.5GW of STEPs (pumped-storage hydropower plants) by 2030-2035. Over and above the production of renewable energy and its expansion, hydroelectric power also plays a major role in managing water resources locally. Regulation applicable to the safety and security of facilities

Concession renewals

Regulatory notice

Regulations applicable to hydropower facilities in France In France, hydropower facilities are subject to the provisions contained in Articles L. 511-1 et seq . of the French Energy Code. They require concession agreements granted by the State (for facilities generating over 4.5MW), or an authorisation from the Prefecture (for facilities under 4.5MW). Under the French Energy Code, the granting of a hydropower concession is preceded by public notice and competitive tendering in accordance with the terms and conditions set out in Part III of the French Public Procurement Code, subject to the provisions of the French Energy Code. In accordance with Article L. 523-2 of the French Energy Code, when a hydropower concession contract is renewed or extended under the conditions provided for by Articles L. 521-16-2 or L. 521-16-3 of the French Energy Code, an annual concession fee that is proportional to the revenues generated by the concession contract is levied, which is paid in part to the French State and in part to the French départements and municipalities through which the waterways used flow. Hydropower concessions have an initial term of 75 years pursuant to the French Law of 16 October 1919 relating to hydropower use. Most hydropower concessions that expired before 2012 were renewed for terms of 30 to 50 years. However, the French State has not yet renewed 20 concession contracts which lapsed on 31 December 2020, corresponding to installed power of 2,508MW. Since their expiry these concessions have fallen under the “rolling delay” situation defined by Article L. 521-16 par. 3 of the French Energy Code as when a concession that has expired but not been renewed is extended under its former conditions until such time as a new concession is granted so as to ensure the continuity of operations in the meantime. In this context, EDF is preparing for the renewal of concessions under the legal framework, combining improved energy efficiency, attention to aquatic environments, compensation of the government and municipalities through fees and regional development, while ensuring the safety and security of operations. Discussions between the French State and the European Commission (EC) to resolve to formal warnings in this respect are ongoing. In the first notice dated 22 October 2015, the European Commission considers that the French State has infringed the provisions of on Article 106 section 1 of the Treaty on the Functioning of the European Union (TFEU) by awarding the majority of the hydroelectric concessions in France to EDF and renewing them with EDF as these steps strengthen EDF’s dominant position on the French retail electricity markets. The State replied to this notice, which marked the beginning of an adversarial exchange of positions between the State and the EC, which does not affect the final decision that will be adopted by the EC. As the chief interested party, EDF sent its observations to the EC on 4 January 2016, firmly contesting the EC’s analysis and the grounds for this analysis. EDF has since been involved in certain exchanges between the French State and the EC, particularly to provide technical details on the operation of the French market. Furthermore, on 7 March 2019, the European Commission sent the French government a second formal notification concerning the renewal of hydropower concessions contracts. Seven other Member States also received formal warnings: Austria, Germany, Poland, Sweden, Portugal, and the UK, with Italy also receiving a second, additional formal warning. More specifically concerning France, the Commission alleged problems with the application of European law concerning public orders to these renewals as well as issues of non-compliance of French legislation governing these renewals with the same European Public Order law. The French government had two months to respond to the European Commission. See also section 2.2.1 “Market regulation: political and legal risks”, risk factor 1C – "Changes to the regulatory framework for hydropower concessions".

(1) With the support of the EDF Foundation. (2) For more details, refer to the report by the Hydro Safety Inspector (Inspecteur pour la sûreté hydraulique) available on EDF’s website.

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EDF - UNIVERSAL REGISTRATION DOCUMENT 2020