Universal Registration Document 2020

6. Financial statements

 Note 2 Summary of significant events

Apart from the Covid-19 pandemic presented in note 1.4.1 and the sale of the E&P operations presented in note 1.4.2, the main significant events and transactions for the Group in 2020 are the following:

  • Nuclear developments:
  • EDF restarted Hunterston B power station and confirmed its plan to move into the decommissioning phase by January 2022. It also announced that Hinkley Point B power station in Somerset will enter into the defueling phase no later than 15 July 2022 (see the EDF Energy press release of 27 August 2020 and 19 November 2020, and note 10.8);
  • the Group readjusted the cost of the Grand Carénage programme to increase safety and extend the operating life of nuclear reactors beyond 40 years (seethe press release of 29 October 2020 and note 10.6);
  • Hinkley Point C project update (see the press release of 27 January 2021 and notes 10.6 and 10.8).
  • Financing operations:
  • EDF made a landmark offering of Green Bonds convertible into new shares and/or exchangeable for existing shares (OCEANEs vertes) (see the press releases of 8 September 2020 and note 18.3.2.2 and 14.5);
  • EDF raised €2.1 billion through two issues of hybrid notes (see the press release of 8 September 2020 and note 14.4.2);
  • EDF and Standard Chartered Bank signed a €200 million credit facility indexed on ESG criteria (see the press release of 30 October 2020 and note 18.4).
  • Renewable energies:
  • EDF Renewables, Enbridge and wpd began construction of the Fécamp offshore wind farm (see the press release of 2 June 2020 and note 12.3); the EDF and CEI groups became partners for the construction and operation of offshore wind power projects in China (see the press release of 2 June 2020and note 12.3);
  • EDEN Renewables India increased its portfolio with 1,350MWp of new solar photovoltaic power plants (see the EDF Renewables press release of 1 October 2020 and note 12.3);
  • EDF Renewables - Jinko Power consortium reached the financial closing of the world’s largest solar project and launched its construction in Abu Dhabi (seethe press release of 22 December 2020 and note 12.3);
  • EDF commissioned the new Romanche-Gavet hydroelectric plant, France’s biggest hydropower project (97MW) (see the press release of 9 October 2020);
  • fifth anniversary of the Paris Agreement: EDF stepped up its ambitions and made new climate commitments (see the press release of 10 December 2020 and note 20)..

The main significant events and transactions for the Group in 2019 were the following:

  • Nuclear developments:
  • Flamanville 3 EPR: following the quality deviations affecting the welds located on the main steam transfer pipes covered by the break preclusion principle, the ASN’s decision regarding repairs to the penetration welds led to revision of the project costs and timetable (see the press release of 11 April 2019,20 June 2019, 26 July 2019, 9 October 2019 and note 10.6);
  • Hinkley Point C: a review of the HPC project’s costs, schedule and organisation was undertaken (see the press release of 25 September 2019 and note 10.6).
  • Renewable energies:
  • The EDF group began construction of the Scottish 450MW offshore wind farm Neart na Gaoithe (NnG) with its new Irish partner ESB, which took a 50%stake in the project (see the press release of 28 November 2019 and notes 3.1 and 5.4.2).
 France multi-year energy programme (PPE)

The PPE covering the periods 2019-2028 was adopted by decree 2020-456 of 21 April 2020, published in the Journal officiel of 23 April 2020. The points on which the final programme differs from the drafts published on 25 January 2019 and20 January 2020 essentially relate to renewable energies. The PPE sets a target of doubling the 2017 level of installed capacity for electricity from renewable energies by 2028, and increasing offshore wind power capacities, with 6 project tenders to be launched in the first PPE period. EDF’s strategy is entirely consistent with this aim.

To reduce nuclear power output, as well as the closure of the two Fessenheim reactors in the spring of 2020, 12 nuclear reactors will have to be shut down by 2035 (see note 5.4.3). The reactors concerned will be shut down when their fifth 10-year inspection is due, except for 2 reactors which will be shut down earlier in 2027and 2028 (two additional reactors could also be shut down in 2025-2026 if certain conditions relating to electricity prices and secure supply are fulfilled). Priority will be given to shutdowns that minimise the economic and social impact, have the lowest impact on the electricity network, and do not entail closure of an entire site. At the request of the French government, based on these criteria, on 20 January 2020 EDF proposed to examine the possibility of shutting down pairs of reactors at the sites of Blayais, Bugey, Chinon, Cruas, Dampierre, Gravelines and Tricastin. The PPE stipulates that early reactor shutdowns will be confirmed 3 years prior to implementation.

Adoption of the PPE in April 2020 led to re-estimation of nuclear provisions  at 30 June 2020, referring to various scenarios for the early shutdowns of two reactors in 2027 and 2028. This resulted in a €32 million increase in provision related to nuclear generation on 31 December 2020 (mainly decommissioning provisions, see note 15.1.1.3). Accelerated depreciation periods were also estimated based on these scenarios, leading to an increase in depreciation in the second half of the year, with no significant impact on the consolidated financial statements (see note 1.3.4.1).

The reactor shutdowns at the Fessenheim plant took place on 22 February 2020 for reactor 1 and 30 June 2020 for reactor 2, in accordance with decree 2020-129 of 18 February 2020 terminating the plant’s operating licence (see note 5.4.3).

Public consultation on regulation of existing nuclear facilities

As announced in the draft PPE published on 25 January 2019, in January 2020 theFrench government launched a call for contributions regarding the fundamental findings driving the plan to reform the economic regulations for existing nuclear facilities, and their construction and operating principles. The proposed regulations would replace the ARENH mechanism and require EDF to provide a service of general economic interest (SGEI) for protection of the consumer and the climate to the benefit of all French consumers, ensuring transparency and non-discrimination.

This SGEI would be supported by economic regulation of the existing nuclear fleet, to reconcile and contribute to the following aims:

  • long-term protection of all consumers located on French territory, regardless of their supplier and with respect to some of their non-peak power supplies, by enabling them to benefit from stable conditions for carbon-free, manageable production of electricity by the existing nuclear fleet they helped to finance;
  • achievement of the climate targets France has set itself, and also of its objectives for a secure power supply and energy independence, by safeguarding the carbon-free electricity supply in France and more broadly in Europe, through secure long-term financing for operation of the existing nuclear installations that are necessary for that supply.

Like many other actors in the sector, the EDF group participated in this consultation, which ended on 17 March 2020.

In this context, France’s Minister for the Ecological and Inclusive Transition and Minister of the Economy and Finance commissioned the CRE to carry out an assessment of the costs borne by the nuclear operator, and to determine fair remuneration for its nuclear activities under the government’s potential future regulations. At a hearing before the French National Assembly’s Economic Affairs Committee on 7 July 2020, the CRE Chairman Jean-François Carenco stated that the CRE had sent its report on the cost of nuclear power in France to the government. The CRE also presented the conclusions of that report to the European Commission’sDirectorate-General for Competition on 16 July 2020.

The terms and conditions of new regulations governing existing nuclear facilities are currently being examined by the French government and the European Commission.