EDF_REGISTRATION_DOCUMENT_2017

5.

THE GROUP'S PERFORMANCE IN 2017 AND FINANCIAL OUTLOOK Subsequent events

5.2

SUBSEQUENT EVENTS

Confirmation of the decision of the European Commission regarding the ■ treatment of provisions established between 1987 and 1996 for the renewal of French General Electricity Network (see press release of 16 January 2018 and note 50.1 to the consolidated financial statements for the year ended 31 December 2017). EDF group announced on 22 February 2018 that it has identified a quality ■ discrepancy in relation to the weldings of the circuit which evacuates the steam from steam generators to the turbine of Flamanville 3 EPR. On this basis, the Group declared on 30 November 2017 a significant event to the ASN (see section 1.4.1.2.2 "Update on the Flamanville EPR project"). On 10 March 2018, EDF and NPCIL (Nuclear Power Corporation of India ■ Limited), the government-owned Indian energy company, signed an Industrial Way Forward Agreement for the implementation of six EPR reactors at the Jaitapur site in India. Jaitapur is set to be the biggest nuclear project in the world, with a total power capacity of around 10GW. The agreement defines the project’s industrial framework, the roles and responsibilities of the partners, as well as a planned timetable for the next steps. Under the terms of the agreement, EDF will act as supplier of the EPR technology. EDF will undertake all engineering studies and all component Brent oil prices closed in February 2018 at $65.8/bbl. The average price for January and February 2018 was $67.5/bbl, an increase of $11.7/bbl compared to the average prices in January and February 2017. This upswing is mainly due to the statements made in 2017 supporting the enlargement and extension of the Vienna agreement until the end of 2018. Additional factors include the limitation of Nigerian production (previously unaffected by the agreement) to 1.8 million barrels per day, political tensions in Saudi Arabia, military operations that are restricting exports from Iraqi Kurdistan, as well as tensions between Iran and the United States in 2018. To a lesser extent, the uncertainty in global demand has also resulted in a drop in the Brent price in February 2018. In January and February 2018, gas spot prices in the French market PEG North reached €19.7/MWh on average, down by €0.9/MWh compared with January and February 2017 average prices. Average temperatures in January and February 2017 were 0.6°C below normal due to a cold spell in France and Europe in mid-January, with temperatures up to 6.7°C below the norm. January 2018 temperatures were particularly mild although a cold spell briefly struck France and Europe in late February with temperatures up to 10.9°C below normal. Average temperatures in January and February 2018 were 0.1°C below normal, i.e. 0.5°C higher than during the January-February 2017 period. The cold spells led to an increase in gas spot prices in January 2017 and February 2018 respectively due to higher consumption. On 28 February 2018, spot prices reached their highest level since October 2013 at €37.0/MWh as a result of the weather conditions impacting all of Europe, an unforeseen shutdown of the Kollsnes facility and low storage levels. The price of CO 2 emissions certificate for delivery in December 2018 closed in February 2018 at €10.1/t against €5.2/t at the end of February 2017 for December 2017 delivery contracts. Prices followed an upward trend in 2017, supported by the announcement of a Franco-German collaboration on the reform of emission certificates trading aimed at rebalancing the market as well as the establishment of an agreement protecting the market from a brutal withdrawal from the EU-ETS by the United Kingdom in the event of Brexit. In addition, on 9 November 2017, after two years of discussions, the EU Council and the European Parliament agreed on EU-ETS reform for the 2021-2030 period. The draft of this reform was approved by the European Parliament on 6 February and 27 February 2018, which contributed to an increase in prices. 5.3 AND FEBRUARY 2018

procurement activities for the first two reactors. For the other four units, the responsibility for some purchasing activities and studies may be assigned to local companies. EDF will also provide NPCIL with its valuable experience from the construction of EPR reactors. In its capacity as owner and future operator of the Jaitapur Nuclear Power Plant, NPCIL shall be responsible for obtaining all authorisations and certifications required in India, and for constructing all six reactors and site infrastructures. EDF and its industrial partners will assist NPCIL during the construction phase. This industrial framework has already been experienced in India and will be bolstered by the complementary skills and experience of the partners involved. In this manner, the knowledge and expertise required to operate the plant can be readily shared. It will also pave the way for the industrial involvement of Indian companies in the project, opening up possibilities for partnerships within the French nuclear power sector. In this way, the project will be developed in line with Indian policies “Make in India” and “Skill India”, with the ever-increasing participation of local companies, reaching a potential 60% for last two of the six reactors. The framework agreement has provisions for a preliminary tender by EDF to be submitted in the weeks following its signature, with the objective of producing a binding EDF tender towards the end of 2018. The price of coal for delivery in Europe in 2019 ended February 2018 at $79.3/t, up by $12.6/t compared to the 2018 contract closed at the end of February 2017. On average, in January and February 2018, the N+1 prices for coal for delivery were $16.9/t higher than during January and February of last year, ending at $83.2/t. Prices were pushed upward during 2017 due to decreases in supply particularly during the passage of cyclone Debbie in Australia which affected mines and infrastructures, and following strikes, mainly in Australia. Moreover, an increase in demand, particularly in China, during high summer temperatures and at the end of the year to rebuild stocks, led to a sharp increase in prices during the second half of 2017. In February 2018, this increase was mitigated by the drop in extraction and transportation costs associated with the slight reduction in oil prices. Spot prices for day-to-day electricity in France in January and February 2018 reached on average a baseload price of €41.5/MWh and a peak demand price of €49.7/MWh. Prices in January and February 2017 reached much higher levels, with on average a baseload price of €65.3/MWh and a peak demand price of €78.9/MWh. These 2017 price increases were due to high consumption as a result of the cold spell in January. The hourly maximum consumption exceeded 93GW on Friday 20 January 2017, whereas the spot price reached a daily maximum of €121.1/MWh on Wednesday 25 January 2017. Moreover, this period was marked by diminished nuclear power availability caused by the shutdowns required for the verifications of the units affected by the Le Creusot matter. In January 2018, the supply-demand balance was very slack, marked by diminishing consumption caused by temperatures largely above normal on the one hand, and by strong production of renewable and nuclear energy on the other hand. In February 2018, consumption was affected by a short cold spell. Consumption exceeded 94 GW over several time brackets on 28 February 2018, and the highest daily price was recorded on 27 February 2018 at €83.8/MWh. German spot prices settled at an average baseload price of €34.5/MWh and a peak demand price of €42.7/MWh in January and February 2018. Average prices in 2017 were €46.4/MWh baseload and €61.9/MWh at peak demand, driven by the January cold spell that also affected Germany. At the end of February 2018, the prices of French annual contracts for baseload and peak demand deliveries in 2019 were respectively €39.3/MWh and €50.8/MWh. Forward electricity prices for delivery in France in 2018 closed in February 2017 at a baseload price of €35.9/MWh and a peak demand price of €47.3/MWh. The increase in price is mainly due to the increase of fuel prices.

CHANGES IN MARKET PRICES IN JANUARY

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EDF I Reference Document 2017