EDF_REGISTRATION_DOCUMENT_2017

2.

RISK FACTORS AND CONTROL FRAMEWORK Dependency factors

2.3

DEPENDENCY FACTORS

31 December 2016). The contract for 2016-2023 was signed in February 2016 (see section 1.4.1.1.4 “The nuclear fuel cycle and related issues” – “Front end”); recycling, which covers the manufacture of MOX fuel, is carried out, for its part, ■ in the MELOX plant belonging to AREVA NC-Orano.

The EDF group does not consider itself to be dependent on any single customer. With regard to suppliers, EDF used 12,880 in 2017 (against 12,333 suppliers in 2016 and 12,806 in 2015). In 2017, the top five suppliers of EDF represented 17.5% (16.4% in 2016 and 16.4% in 2015) of the total amount ordered by EDF (excluding fuel purchases), and the top ten represented 23.9% (22.5% in 2016 and 22.6% in 2015). Certain suppliers and subcontractors that provide products or services that the Group purchases in conjunction with its operations cannot be replaced. The issue of EDF’s dependency vis-à-vis its suppliers arises primarily in the nuclear sector and, to a lesser extent, in IT and telecommunications in respect of specific and secure means of transmission. The EDF group has developed expertise as an architect-builder of its power generation plants and as a nuclear fuel cycle integrator, which gives EDF technical expertise that is independent of that of its suppliers. Lastly, the EDF group historically had very important commercial relations with the AREVA group, which worked on each stage of the nuclear fuel cycle and in the design, construction and maintenance of the nuclear boilers in EDF’s fleet. In France, the AREVA group was EDF’s main supplier in the nuclear sector and EDF was the AREVA’s group’s main customer. Since 31 December 2017, the activities of AREVA have been split in two: they are carried on partly by Orano, for the fuel cycle and by Framatome, a subsidiary of EDF, for the design, manufacture and maintenance of the boilers in the nuclear generation fleet. The situation of interdependency in relation to the entities of the Orano group remains today. The relationship between EDF and the AREVA-Orano group with respect to the fuel cycle is governed by multi-year contracts. For the front end of the nuclear fuel cycle (see section 1.4.1.1.4 “The nuclear fuel cycle and related issues – Front end”), EDF relies to a large extent on the AREVA-Orano group, which accounted for approximately 52% of EDF’s purchases in 2017 (52% in 2016): for its natural uranium requirements, EDF pursues a policy aimed at diversifying ■ its sources of supply in terms of origins and suppliers; the AREVA-Orano group remains an important supplier to EDF in this field; in terms of the nuclear conversion process, a significant share of the ■ requirements of EDF are met by AREVA NC-Orano, in competition with other worldwide suppliers; in the field of uranium enrichment, EDF has also diversified its supply sources and ■ now uses several major worldwide suppliers. The Georges Besse II plant belonging to AREVA NC provides a significant share of these services (see section 1.4.1.1.4 “Nuclear fuel cycle and associated issues”). For the manufacture of fuel assemblies, EDF uses two suppliers: Framatome and Westinghouse. Since the parent company of Westinghouse was put into chapter 11, EDF, in direct communication with this supplier, is constantly vigilant to ensure the operational continuity and legal security of all of the ongoing contracts. For the back-end nuclear fuel cycle (see section 1.4.1.1.4 “The nuclear fuel cycle and related issues – The back-end cycle”), the AREVA NC-Orano group has been appointed to perform all operations in France: spent fuel management operations (removal, storage and treatment) are carried ■ out in the AREVA NC-Orano plant at La Hague. The terms and conditions for these operations, as well as the recycling of processing by-products, have been agreed for the 2008-2040 period in the EDF-AREVA master agreement of 19 December 2008 and included in successive application contracts (see note 29.1.1 to the consolidated financial statements for the fiscal year ended NUCLEAR FUEL CYCLE 2.3.1

2.3.2

POWER PLANT DEVELOPMENT

AND MAINTENANCE Framatome is EDF’s main supplier of power plant construction and maintenance services. In particular, Framatome supplies nuclear boilers, their spare parts and the corresponding safety studies. In 2011, EDF signed two major contracts with Framatome, one for the production of 32 of the 44 steam generators for the 1,300MW segments, and the other for the renovation of the control-command systems for the 1,300MW reactors at the time of their third ten-year inspection. The production of the steam generators covered under the first contract is underway, although quality defects in the projects delay the installation of new components on the installations. With regard to the second contract, the first facilities for the second segment of the Paluel power plant was begun in 2015 but could not be completed due to an unforeseen that occurred in March 2016 on this installation (fall of a used steam generator during its handling, see section 1.4.1.1.2 “Operation and technical performance of the nuclear fleet”). The renovation of the control-command systems, covered under the contract, has since been successfully carried out on the Paluel 1 and Cattenom 1 units. Moreover, a diversification programme has been under way for several years, in particular, with Westinghouse and Mitsubishi, for the replacement of certain major components of the boiler (12 of the 44 steam generators for the 1,300MW series will be provided by Westinghouse) and for maintenance services. To prepare for the renewal of its power generation facilities, EDF has decided to use the EPR technology developed with Framatome, and has initiated construction of the Flamanville EPR power plant. In connection with this project, in 2007, EDF signed a contract with Framatome for the supply of the EPR boiler. EDF also has a relationship with the ALSTOM group for the maintenance of certain components of nuclear and fossil fuel-fired power plants. In addition, ALSTOM is supplying the engine room for the Flamanville 3 EPR. Goods and services that ALSTOM supplies to EDF are particularly important for the maintenance of the nuclear power plants’ turbo-generators and of certain major components of fossil fuel-fired generation facilities. EDF does not consider itself to be dependent on the ALSTOM group, which is subject to competition with regard to most of its activities. EDF has nonetheless sought to maintain its interests in the nuclear field following the purchase by General Electric of ALSTOM’S Energy division. The main challenge for EDF is twofold: ensure, at an acceptable cost and until the end of each unit’s lifespan, the ■ industrial capacity necessary to maintain under operational conditions and extend the lifespan of the nuclear generation fleet operated by EDF in France and the United Kingdom including the Flamanville 3 and Hinkley Point C EPR reactors; ensure the availability for future EDF nuclear projects of turbine offers under ■ excellent technical and economic conditions. Preservation of these strategic interests relies on framework agreements and the creation of a joint GEAST subsidiary dedicated to nuclear power plant machine rooms activities. The agreement between the French State, ALSTOM and General Electric (GE) signed on 21 June 2014 provides for a joint venture between GE and ALSTOM (GEAST), of which ALSTOM will hold 50% of the stake less one vote. GEAST is expected to develop ALSTOM’s nuclear activities on an exclusive and worldwide basis, as well as ALSTOM’s steam (non-nuclear) business in France alone. The French State holds a “golden share” in the joint venture, is represented therein by a director and has veto rights on certain governance issues.

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