EDF_REGISTRATION_DOCUMENT_2017

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PRESENTATION OF EDF GROUP Description of the Group's activities

Investment programme for the existing nuclear fleet in France EDF’s industrial strategy is to operate the existing nuclear fleet well beyond 40 years under the best conditions of nuclear safety (integrating, in particular, post-Fukushima modifications), of environmental safety and protection, which requires to keep on performing significant maintenance operations over the 2014-2025 period. To overcome this challenge, involving all of the nuclear power sector on the short term, the “Grand Carénage” programme was implemented, in order to be able to integrate, with the Group’s industrial partners, the significant amount of work to be done on the fleet. On 22 January 2015, EDF’s Board of Directors approved in principle a major overhaul programme (the “Grand Carénage”) aimed at refurbishing the French nuclear fleet, enhancing reactor safety and, if conditions allow, continuing their operation which was estimated to cost up to € 2013 55 billion (€60 billion in current euros) in total over the 2014-2025 period for the 58 reactors currently operating (1) . The optimisation work undertaken since (reductions and postponements) led to a downward revision of the overall cost of the programme to € 2013 45 billion (or €48 billion in current euros) over the 2014-2025 period. This revision is largely a result of continued optimisation efforts regarding the adopted technical solutions and component replacement strategies and greater precision in their application by integrating the capacities of the industrial base, which enabled certain expenses to be postponed, and taking into account the early closure of the Fessenheim plant on 31 December 2018. By dint of these measures, around € 2013 7 billion (or €8.5 billion in current euros) in costs was reduced and around € 2013 3 billion (or €3.6 billion in current euros) of spending was postponed to after 2025 for total savings of € 2013 10 billion (or €12 billion in current euros) from initial estimates, of which € 2013 5.6 billion (or 6.5 billion in current euros) in ten-year visits and applied feedback from Fukushima, € 2013 2.8 billion (or €3.3 billion in current euros) in replaced steam generators and large parts and € 2013 1.5 billion (or €2.3 billion in current euros) in other engineering projects and ongoing maintenance. For the existing nuclear fleet, the programme covers both usual maintenance spending and investments required to extend the lifespan of equipment (replacement of the, VD4 900 and VD4 1300, steam generators). It is estimated to cost an average of about €4 billion annually until 2025 before decreasing towards about €3 billion annually. In 2014 and 2015, asset acquisitions in the existing nuclear fleet (“Grand Carénage”) amounted to €3.6 billion before reaching €3.8 billion in 2016 and €4.2 billion in 2017. In order to complete the programme, a separate entity was created, the “Grand Carénage”. The programme’s sponsor is the Nuclear and Thermal Fleet Department (DPNT) which approves the programme’s scope, currently broken down into 22 projects, and financial trajectory. The programme’s supervision is taken care of by the Nuclear Generation Division, which defines the content of the activities. Project management is handled by the Programme Director assisted by the project managers over the life of the project in all areas: deadlines, quality control, financial trajectory. The Board of Directors examines the main investments for each major category of projects whose chief characteristics are presented to it, approves contracts or deals above a predefined amount, and conducts the annual review of the programme’s implementation on the basis of indicators showing the extent of its physical and financial progress, what remains to be completed and the final costs. This industrial programme is being gradually implemented in compliance with the objectives of Energy transition for green growth Law, multi-year energy plans and the opinions and orders of the ASN as well as the procedures for authorisation for reactors to run for more than 40 years (see section 1.4.1.1.5 “Preparing for the future of the nuclear fleet in France”).

was thus demonstrated. The Group therefore plans to reconnect Fessenheim reactor 2 to the grid at the end of March 2018. The exhaustive audit of the Creusot Forge manufacturing records will continue in 2018 according to a schedule sent to the ASN based on the outages of the 58 units over 2018. At end 2017, the analysis of the parts of 12 fleet units was finalised with the ASN; continuing to analyse and deal with the fallout in late March 2016 of a worn-out ■ steam generator in the Paluel 2 reactor building, when it was being replaced during the reactor’s third ten-year inspection. The steam generator was successfully lifted and removed. The damaged pool was repaired in the summer of 2017. Replacement of the steam generators began in late October 2017 and work to restart the Paluel 2 reactor will continue in early 2018. The order extending the duration of the Paluel 2 nuclear facility outages by two years was issued on 26 January 2017 and published in the Journal Officiel on 4 February 2017; finalising the examination of repairs to the Bugey 5 reactor containment with the ■ IRSN and the ASN in order to reconnect Bugey 5 to the network by the end of July 2017. The reactor was shut down on 27 August 2015 to reload fuel and carry out maintenance work. The outage was extended after a tiny leak in the lower section of the reactor containment was detected. On 7 April 2016 the findings of the leak analysis were sent to the ASN which on 3 April 2017 approved EDF's proposed fix; repair work duly began in the spring of 2017. After these repairs successful containment building pressure tests were carried out on the Reactor Building 5 wall and the Bugey 5 reactor was restarted and connected to the network in late July 2017; the successful “sleeving” of the Gravelines 5 reactor steam generators which ■ enabled the reconnection of the reactor to the grid in late July 2017. The reactor had been shut down on 9 April 2016 for its third ten-year inspection. The replacement of the three steam generators had been scheduled to take place during the shutdown but had to be postponed after the new parts failed to obtain a Safety Certificate from the ASN. Studies by EDF at the time showed that the original steam generators were still completely safe to use provided certain tubes were fixed by means of “sleeving”. The proposed fix was approved by the ASN on 2 February 2017 and carried out in the spring of 2017. detecting and promptly dealing with several anomalies relating to generic defects ■ in the earthquake resistance of various equipment: the anchors of the auxiliary systems of the 1300 backup diesel generators ■ and CPO (dating from when the units in question were built), rusting and thinning pipes installed in the pumping stations with the ■ potential risk of internal flooding in the event of a Safe Shutdown Earthquake which could result in a breach and thus trigger the failure of the cooling system (related to unsuitable maintenance programmes), the undemonstrated resistance to a Safe Shutdown Earthquake of part of ■ the Tricastin dike with the ASN ordering a temporary shutdown of the four reactors to give EDF time to carry out the reinforcements it had proposed. Although it did not share the view that the four reactors need to be shut down during the repairs, EDF implemented the ASN's decision. The reactor shutdown resulted in 6TWh of lost production. Furthermore, Generation was also interrupted by exceptionnal damages (costing around 4TWh) and longer-than-expected outages (costing around 6TWh). The performance losses related to unplanned outages rose from a rate of 2% in 2016 to 3.26% in 2017 because of three exceptionnal damages. Without these, the rate of unplanned outages in 2017 would have been 2.0%, not far from the 2016 figure. These figures do not undermine the maintenance strategy implemented in 2007 to renovate and replace major components which has brought the overall rate of unplanned outages down to 30% since 2009. The outages extensions experienced in 2017 were caused in equal measure by maintenance and operational quality issues, technical failures and project management deficiencies.

The figures presented by the French Cour des comptes in its report of 10 February 2016 cover a longer time horizon, up to 2030, and included, beyond the investment, operating (1) and maintenance expenses. Both assessments are consistent, as stated by the Cour des comptes in its report. Indeed, among the overall estimates calculated by the Cour des comptes and amounting to close to € 2013 100 billion for the 2014-2030 period, the investment -expenditures estimated at € 2013 74.73 billion should be distinguished from the operating expenditures estimated at € 2013 25.16 billion. Within the € 2013 74.73 billion of investment expenses between 2014 and 2030, € 2013 55 billion are dedicated to the 2014-2025 period, which allows the two estimates established by the EDF group and the Cour des comptes to be connected.

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DF I Reference Document 2017