EDF_REGISTRATION_DOCUMENT_2017

1.

PRESENTATION OF EDF GROUP Legislative and regulatory environment

Safety and security of facilities Articles R. 214-112 et seq. of the French Environment Code contains provisions that are applicable to the safety and security of hydropower facilities that are authorised and operated under concession contracts. Dams are divided into three classes (A, B and C) according to their characteristics, in particular their height and the volume of the floodwaters. According to this classification and the legal rules applicable to the facility, the regulations require the operator or concession contract holder to fulfil a certain number of obligations in order to guarantee the safety and security thereof (in particular by carrying out and updating hazard studies – see section 1.5.1.4.1.2 “Hydropower safety”). The aforementioned Decree of 27 April 2016 on hydropower energy concession contracts contains provisions that are designed to unify the regulations, regardless of the legal rules that are applicable to the facility. Regulations applicable to renewable 1.5.6.2.5 energy generation The “Climate Package” (known as the “2020 Energy-Climate Package”) is the source of a set of measures aimed at ensuring that, by 2020, the EU will achieve the objectives of a 20% reduction of greenhouse gas (GHG) emissions, a 20% improvement in energy efficiency and a 20% portion of renewable energy (REN) in energy consumption. The “2020 Energy-Climate Package”, which was adopted on 24 October 2014, set new targets for 2030: a 40% reduction in GHG emissions compared to 1990, 27% of renewable energies in the energy mix and a 27% improvement in energy savings. One of the five instruments that make up the “2020 Energy-Climate Package” is Directive no. 2009/28/EC of 23 April 2009 on the Promotion of the Use of Energy from Renewable Sources, known as the “REN” Directive. It allocates the effort to reach the target of 20% of renewable energies in final EU energy consumption by 2020 among Member States, taking into account, among other aspects, the national energy mix, the potential of each State and its GDP, and requires Member States to adopt national renewable energy action plans. According to Article 4 of the aforementioned REN Directive, France adopted its National Action Plan in favour of renewable energies (2009-2020). This plan, in accordance with the REN Directive, sets a national target of a 23% share of energy from renewable sources in the gross final consumption of energy by 2020. The Law of 17 August 2015 on Energy Transition for Green Growth also provides for a target of 32% of renewable energies in energy consumption by 2030. Moreover, the same Law provides that the National Plan will be replaced by the part of the PPE that concerns the development of renewable energies and energy recovery. In order to achieve the objectives of the REN Directive, the Grenelle 2 Law created new land planning instruments with a view to enabling balanced development between the various renewable energy sectors. These include: regional climate, air and energy schemes (SRCAEs), for which the legal ■ framework is laid down in Articles L. 222-1 to L. 222-3 and R. 222-1 to R. 222-7 of the French Environment Code. As of 1 May 2014, all regions had adopted their SRCAE; regional schemes for connection to renewable energy networks (S3RERs), of ■ which Articles D. 321-10 to D. 321-21 and D. 342-22 to D. 314-25 of the French Energy Code specify the content, approval rules, host capacity management and financial conditions for the connection of electricity producers. Under Article 15 of the REN Directive, an Order of 14 September 2011 (ratified by Law no. 2013-619 of 16 July 2013) amended the legal rules on the guarantees of origin of the electricity produced using renewable sources or by cogeneration, laid down in Articles L. 314-14 et seq. of the French Energy Code. The terms and conditions to implement this new scheme and the rules for appointing the organisation in charge of managing guarantees of origin (issuing, transfer, cancellation) are stipulated in Articles R. 314-24 to R. 314-41 of the French Energy Code. As producer and mandatory purchaser of electricity produced using renewable energy sources, the EDF group is concerned by these provisions. The Law of 17 August 2015 on Energy Transition for Green Growth has empowered the Government to take Order no. 2016-1059 of 3 August 2016 relating to the electricity generation from renewable energies, which has amended the provisions applicable to facilities generating electricity from renewable sources in order to ensure their better integration into the electricity market and to provide the technical provisions necessary for better integration into the electricity system of connected electricity generation facilities to a public distribution network, particularly facilities generating electricity from renewable sources.

EDF’s hydropower generation business is subject to the substantive provisions of water regulations. Such regulations cover in particular control over variations in water levels and flow rates, the safety of areas in the vicinity and downstream of hydropower facilities and, in general, maintaining balanced management of water resources (see section 1.5.6.1 “General regulations that are applicable to the environment, health, hygiene and safety”). Competitive tendering for hydropower concession contracts Until 1 April 2016, the competitive tendering procedure for hydropower concession contracts was still governed by Decree no. 94–894 of 13 October 1994, which has now been incorporated into Book V of the regulatory section of the French Energy Code (cf. Decree no. 2015-1823 of 30 December 2015 on the organisation of the regulatory section of the French Energy Code). This Decree, as amended by Decree no. 2008-1009 of 26 September 2008, places concessions within the legal framework for public service delegation contracts defined by Law no. 93–122 of 29 January 1993, known as the “Sapin Law”, it being specified that the former preferential right of the outgoing operator was eliminated by the Water Act (Law no. 2006-1772 of 30 December 2006) as it was incompatible with European law. For all procedures initiated as from 1 April 2016, the award of hydropower concession contracts is now governed by Order no. 2016-65 of 29 January 2016 and by its Application Decree no. 2016-86 of 1 February 2016 on concession contracts. This legislation has repealed the aforementioned provisions of the “Sapin Law”, in order to modernise them and align them with European law (Directive no. 2014/23/EU of 26 February 2014 on the award of concession contracts). The Law of 17 August 2015 on Energy Transition for Green Growth has completed the legal framework for hydropower concession contracts by giving the State the possibility: of combining concession contracts that form a “series of facilities that are ■ hydraulically linked”, by setting a new deadline for all the concession contracts concerned (Articles L. 521-16-1 and L. 521-16-2 of the French Energy Code); of creating semi-public hydroelectric companies (SEM) made up of private-sector ■ operators and a public Division (State, local authorities, etc.), each of which holds at least 34% of the shares (Articles L. 521-18 et seq. of the French Energy Code); of extending certain concession contracts in return for investments by operators ■ where these investments are necessary in order to reach national energy policy targets (Article L. 521-16-3 of the French Energy Code). The purpose of the Decree of 27 April 2016 on hydropower concession contracts is to implement the provisions of the aforementioned Law of 17 August 2015 and to modernise the regulatory framework for hydropower concession contracts (in particular by clarifying certain aspects of the procedure for awarding hydropower concession contracts by approving a new model for general terms and conditions). A collection of texts complete this framework and concern the execution of the hydropower energy concession agreement: one can quote, in particular, Order no. 2016-518 of 28 April 2016 making various modifications to Book V of the French Energy Code, which aims to strengthen the administrative control of hydroelectric installations and to clarify certain rules with regards to the renewal of their operating rights, the Decree of 27 May 2016 relating to the purchase obligation and additional remuneration, which may concern certain hydroelectric facilities, the Orders of 3 August 2016 relating to the environmental assessment of public information and participation projects and procedures, or the Law of 7 October 2016 for a digital republic. Annual concession fee In accordance with Article L. 523-2 of the French Energy Code, when a hydropower concession contract is renewed or extended under the conditions provided for by Articles L. 521-16-2 or L. 521-16-3 of the French Energy Code, an annual concession fee that is proportional to the revenues generated by the concession contract is levied, which is paid in part to the French State and in part to the French départements and municipalities through which the waterways used flow. A limit is set by the contracting authority on a case-by-case basis for each new or renewed concession contract. Article 69 of Law no. 2015-1785 of 29 December 2015 (the Budget Act for 2016) expressly confirmed that this type of concession fee excludes the application of the concession fees provided for by Article L. 523-1 of said Code, which apply to concession contracts that were renewed before 2006.

94

EDF I Reference Document 2017