EDF_REGISTRATION_DOCUMENT_2017

RISK FACTORS AND CONTROL FRAMEWORK Risks to which the Group is exposed

In France, additional inspections carried out to check compliance or confirm nuclear safety, and non-programmed security upgrades to increase security margins, led to a loss of production of more than 6TWh in 2017. This had led, and could lead in the future, to the Group’s nuclear production and/or financial targets being revised downward (see section 1.4.1.1 “Nuclear electricity generation”). Furthermore, the Group operates or holds equity interests in nuclear power plants elsewhere in the world, in particular the United Kingdom, Belgium, China and the United States, and it may also be required to make costly repairs or modifications to these units or it could be faced with events that may impact their performance, power generation or availability. Like in France, the nuclear safety authorities in these countries may take decisions that require additional works or controls, in particular as regards exploiting feedback from international experience and anticipating potentially precursory events. Furthermore, despite the quality of operations and the changes made by the Group to its power stations, it cannot be ruled out that some of these powers stations will be subject to special operating conditions to reinforce the operating safety margins at the initiative of the nuclear operator responsible for nuclear safety or at the request of the Nuclear Safety Agency. All such events may have an adverse impact on the Group’s financial position and activities. A further serious nuclear accident anywhere in the world may have significant consequences for the Group. Any event adversely affecting nuclear power at the global level is likely to have a greater impact on the Group’s image, activities, productivity, financial position, results and outlook than for its competitors who use this source of energy proportionally less. Despite the measures taken during their design or operation, a serious accident at a nuclear facility cannot be ruled out, such as the nuclear accident in Japan, on the Fukushima Daichi site, following the earthquake and tsunami of 11 March 2011. The way in which the feedback from this accident was taken into account in France is described in section 1.4.1.1.5 “Preparing for the future of the nuclear fleet in France, chapter on additional safety assessments following the Fukushima accident”. A further accident like this anywhere in the world could turn public opinion against nuclear power and lead the competent authorities to tighten power plant operating requirements substantially or to refuse authorisation for proposed extensions of the operating life of power plants, leading to a temporary or permanent suspension of the operation of one or more nuclear facilities, or leading the authorities to consider a moratorium on the use of nuclear power to generate electricity and, therefore, to suspend or cancel all on-going nuclear power plant development projects. Such decisions were taken in Germany (suspension of nuclear power generation) and Italy (suspension of nuclear power plant construction projects) following the Fukushima accident. Such decisions could be taken even if no such accident occurs. If such an accident were to occur near one or more of the Group’s facilities, it could also contaminate the environment and thus jeopardise their operation. Such events would have a major adverse impact on the business model, strategy, activities, results, financial position and outlook of the Group. The Group may not be able to obtain authorisation to continue the operation of its reactors beyond the period currently planned, or it may not even be authorised to exploit them up to the end of this period. In France, in connection with the studies associated with the third ten-year inspections of the 900MW units, in early July 2009 the ASN publicly stated that it had not detected any generic problem calling into question EDF’s ability to ensure the nuclear safety of its 900MW reactors for up to 40 years. As required by the regulations, the ASN’s position has been supplemented by a decision made for each reactor following each of the third ten-year inspections (see section 1.4.1.1.5 “Preparing for the future of the nuclear fleet in France”). Accordingly, at the end of 2017, more than 85% of the 900MW segment units have undergone their third ten-year inspection and, for 11 of them, the ASN has already submitted its final advice to the Minister and has not objected to their continued operation, subject to their complying with additional requirements that it has enacted.

To postpone the construction of new units and the related investments, and to continue to benefit from the low-carbon production and cash flows coming from its existing fleet, the Group aims to extend the operating lifespan of its nuclear fleet in France beyond 40 years. In 2012, the ASN had the improvement proposals submitted by EDF reviewed by the permanent “reactors” group, which judged these proposals positively, although it recommended that they be supplemented and, in certain cases, reinforced. Discussions with the ASN are continuing on this basis. The French Nuclear Safety Agency (ASN) clarified in a letter dated 20 April 2016 its opinion regarding the generic guidelines for the periodic re-evaluation associated with the fourth ten-year inspections of the 900MWe reactor (VD4-900), which was the subject of the permanent “Guidelines” group meeting of April 2015. This periodic re-evaluation, like previous ones, will include, on the one hand, verifying that the facilities comply with the current standards and, on the other hand, carrying out a safety reassessment in order to further improve the level of safety by taking into account best international practices and the state of the facilities, the experience gained during operation and developments in knowledge and rules which might apply to similar facilities. The French Nuclear Safety Authority (ASN) will examine, reactor by reactor, the continuation of operation based on a report giving the conclusions of the periodic re-examination, taking into account the results of inspections and requalification tests. The first concluding report on the fourth re-examination of the 900 reactor series should be available in February 2020 for Tricastin 1. In addition, the Chairman of the French Nuclear Safety Authority (ASN) confirmed that the generic opinion would be given in 2020 (instead of 2019) and that binding instructions applicable to EDF would be presented in 2021 by the ASN. The ASN would base its opinion on the following key elements: Memorandum on Response to Objectives which was trasmitted on 28 February 2018 to the ASN and which give an assessment of the measures proposed by EDF in the context of the fourth periodic re-examination of the 900 reactor series, the results of the public consultation on the generic phase of the re-examination, which will be launched in the second half-year of 2018 under the supervision of the High Committee for Transparency and Information on Nuclear Safety, the conclusions of the permanent “reactors” group currently planned for 2020 and the first concluding report on the fourth periodic re-examination, which should be submitted by EDF in February 2020 for the first reactor concerned. For each reactor and for each authorisation stage, the ASN will decide on the measures taken by the operator and may give additional instructions. Solutions are being studied to demonstrate the capacity of non-replaceable equipment such as the containment building and reactor vessels, to ensure their operation up to 60 years. These studies, which rely on data available in France and internationally (1) aim to confirm the safety margins available for the operating lifespans that are being investigated beyond 40 years. In 2016, all the technical, economic and governance conditions necessary for the amortisation period of France’s nuclear fleet with the Group’s industrial strategy to match were met (see notes 1.3.2 “Management judgments and estimates” and 3.1 “Extension to 50 years of the depreciation period of the 900MW PWR series in France” to the consolidated financial statements as of 31 December 2017). The consolidated financial statements dated 31 December 2017 incorporate the extension from 40 to 50 years of the amortisation period of the 900MW PWR units (except Fessenheim), without prejudice to any decisions which might be made by the French Nuclear Safety Agency following each ten-year inspection regarding authorisations to continue operations, unit by unit, following each ten-year inspection. The accounting period of the other series of France’s nuclear fleet (1,300MW and 1,450MW), which are more recent, currently remains at 40 years, because the conditions for an extension have not been met. The future extension of these other series remains one of the Group’s industrial objectives, undertaken in line with the orientations of its energy policy. However, the Group cannot guarantee that it will receive the expected operating lifespan extension from the competent authorities. Furthermore, such extensions could also be obtained under certain conditions, the financial impact of which, in particular in terms of investments, could affect the Group’s strategy with respect to extending the operating life of its power plants or the Group’s ability to pursue its global investment strategy.

2.

The Nuclear Regulatory Commission (NRC) staff has defined subsequent license renewal (SLR) to be the period of extended operation from 60 years to 80 years. (1) https://www.nrc.gov/reactors/operating/licensing/renewal/subsequent-license-renewal.html.

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EDF I Reference Document 2017