EDF_REGISTRATION_DOCUMENT_2017

THE GROUP'S PERFORMANCE IN 2017 AND FINANCIAL OUTLOOK Operating and financial review

Principal forward electricity prices in europe (baseload year ahead)

70

65

60

55

50

45

€/MWh 40

5.

35

30

25

20

Jul. 16

Jul. 17

Apr 17

Jan. 16

Jan. 17

Jun. 16

Jun. 17

Apr. 16

Oct. 16

Oct. 17

Feb. 16

Feb. 17

May 16

May 17

Nov. 16

Nov. 17

Dec. 16

Dec. 17

Mar. 16

Mar. 17

Aug. 16

Aug. 17

Sept. 16

Sept. 17

Electricity - annual baseload contract France (EEX) Electricity - annual baseload contract Germany (EEX)

Electricity - 1-April annual contract ahead base UK (ICE) Electricity - annual baseload contract Italy (EDF Trading)

5.1.2.1.3

CO 2

emission rights prices (1)

would be unavailable and greater use of fossil-fired plants would be needed. In late December, issuance of quotas was halted on the primary market, and this limited

The price of CO 2

emission rights for delivery in December 2018 ended the year at

the supply and pushed prices upwards.

€8.2/t, up by €1.6/t compared to 2016. After a drop in the early days of January in reaction to the significant rise of late December 2016, then a slow decline sustained by low demand until mid-May, the price of CO 2 emission quotas showed an upturn when a lower-than-expected decrease in CO 2 emissions for 2016 was announced (-2.6% compared to 2015) and political signals supporting higher carbon prices. From August onwards, the rise in these prices was mainly driven by France and Germany's declaration that they intended to work together on a reform to balance the emission quotas market; other factors were the agreement reached to protect the market from being flooded by British quotas in the event of Brexit, and announcements by the ASN stoking fears that part of the French nuclear fleet

After two years of discussions, the Council of the European Union and the European Parliament reached an agreement on 9 November 2017 for a reform of the EU-ETS system for the period 2021-2030. The proposed reform, which is still awaiting formal approval by these bodies, expected in the second quarter of 2018, notably includes: a measure aiming to reduce the emissions ceiling over that period; ■ doubling the Market Stability Reserve's absorption rate of surplus quotas ■ between 2019 and 2023 to 24%.

Average ICE prices for the annual contract, Phase III (2013-2020). (1)

263

EDF I Reference Document 2017