4F – Blackout risk.

Repeated customer power supply interruptions, or a black out, or a widespread power grid incident, in a territory served by the Group could have consequences for the Group’s activities, financial position and reputation, particularly if they were partly attributable to the Group.

Criticality in view of the control actions undertaken: Moderate.

The Group may be faced with repeated power outages or even a black-out, a widespread network incident of considerable scale, or be involved in it, even if the triggering incident occurred on a network not operated by EDF or was attributable to another player.

The causes of power outages can be diverse: local or regional imbalance between electricity generation and consumption, accidental power supply or transmission failure, cascade failures, interconnection problems, delays in investment and the necessary network conversions to meet the needs of energy and ecological transition, difficulty in coordinating players, particularly in a market with insufficient or evolving regulation.

The initial impact of such power failures could be repair costs incurred to re-establish power or restore the network. Power failures may also generate capital expenditures if it were decided, for example, to install additional generation or network capacity. This could also cause a decline in the Group’s turnover. Finally, they could have a negative impact on the Group’s financial position or reputation with its customers and all its stakeholders, particularly if the power outage were to be partly attributable to it.

4G – Industrial safety and impact on environmental assets, including biodiversity.

The Group operates facilities for which accidents could, in the event of a failure in industrial safety, have serious consequences on the human or natural environment, particularly in terms of biodiversity and environmental capital.

Criticality in view of the control actions undertaken: Moderate.

The Group operates or has operated facilities which, as part of their day-to-day operations, can, may or may have been the cause of industrial accidents or environmental and health impacts. The Group’s facilities may be located in industrial areas where other activities subject to similar risks exist, which means that the Group’s own facilities may be impacted by accidents occurring at neighbouring facilities owned by other operators and not under the Group’s control.

Biodiversity issues concern all the Group’s facilities and projects, particularly in France where EDF is a landowner and a manager of natural resources of great importance. This issue is all the more important as energy transition introduces new or reinforced requirements. The Group is committed to biodiversity through its corporate responsibility objective no. 6 (see section 3.3.2.1 “EDF, a company that is responsible with regard to biodiversity (CSRG no. 6)”).

Measures taken for industrial safety and the control of these risks may not be fully effective, which could have consequences for people, property and business continuity. Protective measures may be taken on similar facilities. The Group may be held liable.

Insurance policies for civil liability and damages taken out by the Group could prove to be significantly inadequate, and the Group cannot guarantee that it will always be able to maintain a level of cover at least equal to current cover levels and at the same cost.

Risks specific to nuclear facilities are further developed in section 2.2.5 “Risks specific to nuclear activities”. Risks specific to hydraulic facilities are set out in 4B above.

The impact of an industrial safety failure may have a negative impact on the Group’s operational activity, its financial, legal or property position or its reputation, and may affect the Group’s ability to achieve Corporate Responsibility Objective no. 6 with respect to biodiversity.

The Group owns 40 facilities classified as Seveso under the European Directive for the prevention and management of major industrial risks. These are essentially storage or warehousing facilities for oil, gas or chemicals. The regulatory requirements applicable to this type of facility are implemented at all relevant Group sites. In addition, the Group’s French Seveso sites have all responded to requests from prefects following the fire that occurred on 26 September 2019 at the Lubrizol plant, a Seveso classified site in Rouen.

2.2.5 Risks specific to nuclear activities

The EDF group is the world’s leading nuclear operator in terms of the number of reactors in operation (73 reactors for which the EDF group is the nuclear operator, out of 447 power reactors in operation in the world on 01/01/2020)⁽¹⁾.

The Group has basic nuclear fuel cycle facilities and carries out activities in research, equipment manufacture and the supply of services to other nuclear operators, since the integration of the Framatome subsidiary, within the scope of the Group in 2018.

In addition, the Group holds minority stakes in nuclear power plants in operation in China, the United States and in Belgium, which it does not operate.

The Group is investing in new reactor projects in France, the United Kingdom and China and carries out its nuclear industrial activity in other countries, notably India and the United Arab Emirates, countries in which nuclear operators signed agreements with the Group.

The share of nuclear energy, as a low-carbon form of energy and a part of the Group’s electricity mix, thus represents a significant industrial asset for the competitiveness and development of the Group.

Given the low impact of fossil carbon dioxide emissions from the nuclear industry over the entire industrial lifecycle, the performance and control of nuclear activities contribute directly to the achievement of Corporate Responsibility Objectives in support of the Climate (see CSRG no. 1), fostering human development (see CSRG no. 2), supporting vulnerable populations (see CSRG no. 3), in particular with regard to the fight against fuel poverty and access to clean, low-carbon and competitive energy, including for the most disadvantaged populations, committing to ensuring that each customer consumes more responsibly (see CSRG no. 4), fostering dialogue and consultation (see CSRG no. 5), and supporting biodiversity (see CSRG no. 6). (see sections 3.2 and 3.3). The control and performance of nuclear activities are at the heart of EDF’s sustainable development policy.

The nuclear activities of EDF are associated with the following issues:

• as with any nuclear operator, the latter’s obligations means giving ongoing priority to nuclear safety, based on technical and organisational provisions in order to guard against a nuclear accident and, in the hypothetical event of an accident occurring, to limit the consequences of such an accident. The nuclear business is carried out under the control of nuclear safety authorities in countries where the Group exercises nuclear operator responsibility. Failure to take nuclear safety into account as the number one priority could have a significant, even vital impact on the Group;
• the Group’s nuclear activity is subject to detailed and demanding regulations with, particularly in France, a system in place that monitors and periodically re-examines basic nuclear facilities, which focuses, firstly on nuclear safety, protection of the environment and public health, but also on security considerations regarding malicious acts. These regulations may be significantly tightened by national or European authorities (see section 1.5.3.2 “Specific regulations applicable to basic nuclear facilities”). Furthermore, stricter regulations or possible non-compliance with current or future regulations could result in the temporary or permanent shutdown of one or more of the Group’s plants or financial penalties as stated in Article L. 596-4 of the French Environmental Code. Cases of non-compliance with regulations or non-compliance with commitments undertaken, may also be used by third parties against EDF and brought before the courts. The increased number of requests emanating from the French Nuclear Safety Authority (NSA) and enhanced controls may increase EDF’s compliance costs and risks;
• although the nuclear business can contribute effectively to the security of energy supply and to combating the greenhouse effect, it must also demonstrate its competitiveness and its acceptance over the different time scales in which it operates. Nuclear activity by its very nature requires substantial and long-term investments, sometimes spanning decades. The robustness and efficiency overtime of maintenance and upgrading programmes for the operating fleet, new reactor projects, and the respect of very long-term commitments are inevitably subject to extreme vigilance, with industrial cycles that span a century or even beyond;
• the nuclear fuel cycle is part of this long-term industrial outlook. EDF has a specific responsibility to develop a long-term strategy with the various stakeholders;
• the nuclear business is an industrial activity that brings together a large number of industrial partners in France, Europe and throughout the world. In France, EDF was assigned the role of lead company in the nuclear sector by the public authorities, with the integration of the Framatome subsidiary, which involves specific risks associated with the exercise of this responsibility and the activities of Framatome.

(1) Source: www.iaea.org/pris.