EDF_REGISTRATION_DOCUMENT_2017

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

The creation of Edvance and the successful integration of Framatome into the Group could enable new synergies and strengthen the industrial efficiency and competitiveness of the sector Control of the design, by the nuclear operator, of nuclear reactors is a nuclear safety issue. The creation of Edvance comes within the integrated producer-supplier concept, which has been proven in several countries for industrial reactors for electricity generation, and which has contributed to enabling EDF to becoming currently the number one nuclear operator worldwide. On 17 May 2017, the Board of Directors of EDF approved the creation of Edvance, which concluded the merger of EDF’s Engineering Departments and AREVA NP. It was an essential milestone in the overhaul of the French nuclear sector that was announced in June 2015. Edvance takes charge of basic design and implementation projects (studies, assistance with supply, assembly and commissioning) for nuclear islands and the command and control systems of new reactors under construction, in France and internationally. EDF holds 80% of the share capital of the company and Framatome holds 20%. This new entity was created independently of the acquisition by EDF of New NP on 31 December 2017, which became Framatome on 4 January 2018. The success of this transformation will determine the competitiveness of the nuclear sector, the success of the ongoing and future EPR projects and the financial performance of the Group (see section 1.4.1.2.3.4 “The creation of Edvance”). Following the approval of their respective Boards of Directors on 13 and 14 December 2017, AREVA SA and EDF signed, on 22 December 2017, the final binding agreements fixing the terms of the transfer of an equity holding giving EDF exclusive control of Framatome. The contracts for the EPR Olkiluoto 3 project and the resources required to complete the project, as well as certain contracts relating to components forged in the Le Creusot plant, stay within AREVA NP, in AREVA SA’s scope. This signature took place following the positive opinion issued by the ASN on the commissioning of the Flamanville 3 reactor vessel. This also followed on from the implementation and satisfactory conclusions of the quality audits carried out in the plants at Le Creusot, Saint-Marcel and Jeumont, concerning contracts taken over by Framatome. For these contracts, in any case, EDF remains guaranteed by AREVA SA against any residual risk resulting from these audits. A 75.5% stake in the share capital of New NP was acquired on 31 December 2017. New NP, which became Framatome on 4 January 2018, is the entity formed from the AREVA Group, which brings together industrial activities, design and supply of nuclear reactors and equipment, fuel assemblies and services to the installed base. (See section 1.4.1.3 “Framatome)”. EDF is continuing its comprehensive review of the manufacturing records of the components coming from the Le Creusot Forge plant (71), installed on its nuclear reactors in operation. This project falls within AREVA’s quality plan that has been ongoing since 2015, in association with EDF and under the control of the French Nuclear Safety Authority. The in-depth examination of these records resulted in a list of findings concerning traceability and the transcription of documents, as well as the performance of manufacturing operations. Each of these records is analysed to demonstrate the ability of the equipment concerned to function in complete safety. The comprehensive review of the Le Creusot Forge manufacturing records will continue until 31 December 2018. It cannot be ruled out that the conclusions of these analyses might have a negative impact on the availability of EDF’s nuclear reactors or on the financial performance of the Group. Neither can it be ruled out that a quality issue in manufacture for nuclear operators other than EDF might also have an impact on the financial performance of the Group. The success of the integration of Framatome within the EDF group, which involves convergence on the approach to nuclear projects and the development of synergies arising from this, should enable the French nuclear industry to be more efficient, responsive and effective in carrying out major work such as the “Grand Carénage” programme to overhaul the fleet in operation and the implementation of new nuclear projects. The non-achievement of these objectives could compromise the competitiveness of the nuclear sector in France and that of the Group in its international development. The Group is exposed to changes in the conditions for procuring uranium and conversion and enrichment services. The Group’s operating costs include nuclear fuel purchases. For its nuclear power plants in France and the United Kingdom, EDF purchases uranium and conversion and enrichment services through long-term contracts containing hedging mechanisms that mitigate and smooth price fluctuations over

time. Its main supplier is the Orano group, but EDF pursues a diversification policy by also buying supplies from other industrial companies (see section 2.3 “Dependency factors” and section 1.4.1.1.4 “The nuclear fuel cycle and related issues”). Prices and availability of uranium and conversion and enrichment services are subject to fluctuations due to factors that are inter alia political and economic and that the Group cannot control (in particular, the profitability outlook of mining investments, imbalances between supply and demand or supply shortages associated with, for example, an operating accident in a uranium mine or a combined cycle plant, delays in commissioning new mines or events leading to political instability in a uranium producing country). However, the Group cannot guarantee that its contracts, in France and abroad, will completely protect it from sudden or significant price increases. The Group cannot guarantee that when these long-term contracts expire, it will be able to renew them, in particular at an equivalent price. This could have an adverse impact on the Group’s financial position. To operate its nuclear reactors, the Group relies on the proper functioning of road and rail transport, in particular for the transport of fuel. The transport of new or spent nuclear fuel is a very particular operation that requires specific and restrictive safety and security measures. These constraints could become more stringent, generating additional difficulties and costs for the Group. Furthermore, several factors that are beyond the Group’s control (such as opposition by local residents or anti-nuclear associations, for example, in the form of manoeuvres to prevent nuclear material from being shipped) may slow these operations. Operations may also be interrupted, in particular, in the event of an accident. In such case, the Group may be required to slow or halt some or all power generation at the relevant sites, either due to non-delivery of new fuel assemblies or the saturation of onsite storage facilities, which may have an adverse impact on the Group’s financial position (see section 1.4.1.1.4 “The nuclear fuel cycle and related issues”). The Group is responsible for most spent fuel and radioactive waste from its nuclear power plants, especially Long Life Medium- and High-level waste from spent fuel. The back-end part of the nuclear fuel cycle is described in section 1.4.1.1.4 “Nuclear fuel cycle and related issues”. In France, as an operator of nuclear power plants and radioactive waste producer, EDF is legally responsible for spent fuel from the time it leaves the power plant and for radioactive waste processing and long-term management operations. EDF assumes this responsibility both on the technical and financial levels in accordance with guidelines laid down by the public authorities and under their supervision. EDF is also responsible for all radioactive waste generated during plant operations and decommissioning. The Group’s liability may be alleged, in particular as a nuclear power operator or producer of radioactive waste within the meaning of applicable legislation on waste, in the event of an accident or any damage to third parties or the environment from spent fuel or waste, even if they are handled, transported, kept, warehoused or stored by contractors other than the Group (especially, in France, the ORANO group and the French National Agency for the Management of Radioactive Waste (ANDRA)), in particular in the event of a breach by such contractors. In France, the long-term management of radioactive waste has been the subject of various initiatives under the programme Acts no. 91-1381 of 30 December 1991 on research on radioactive waste management and no. 2006-739 of 28 June 2006 on sustainable management of radioactive materials and waste (see section 1.4.1.1.4 “The nuclear fuel cycle and related issues” – “High-Level Long-Lived Waste (“HAVL”)”). The Group cannot guarantee that all long-life high- and medium-level waste will constitute “final radioactive waste” within the meaning of Article L. 542-1-1 of the French Environment Code and, therefore, that such waste may be directly stored in deep geological layers, especially as the nuclear order of 10 February 2016 adopted pursuant to Law no. 2015-992 on the Energy Transition for Green Growth empowers the administrative authority to reclassify radioactive material as radioactive waste and radioactive waste as radioactive material. Furthermore, the Group cannot guarantee the timeframe in which the public authorities will authorise such storage, or predict certain technical instructions related to such authorisations, which creates uncertainties about the future of the waste, the resulting liability and costs for EDF (see section 1.4.1.1.4 “The nuclear fuel cycle and related issues” – “Storage of packaged residual waste”).

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EDF I Reference Document 2017