Universal Registration Document 2020

6. Financial statements

In 2016, EDF revised the decommissioning estimate, in order to incorporate the audit recommendations and past experience gained from dismantling operations for first-generation reactors (particularly Chooz A).

A detailed analytical approach was used to revise this estimate, identifying all costs for the engineering, construction work, operation and waste processing involved in future decommissioning of reactors currently in operation. This led to figures based on detailed timetables for plant decommissioning. The approach adopted made it possible to explore more thoroughly the assessment of costs specific to the initial units of each series, estimated for each series based on transposition coefficients applied to the baseline costs for the initial 900MW unit, and the series and mutualisation effects, as these costs and effects are inherent to the fleet’s size and configuration.

The natures of the principal series and mutualisation effects used to arrive at the estimate are explained below.

Series effects (effects of work for the first-of-a-kind site on the following sites of the same series) are mainly of two types:

  • first, in a fleet using the same technology, many of the studies do not need to be repeated each time;
  • second, in a fleet using the same technology, robots and tooling can be largely reused from one site to another.

Mutualisation effects (effects between units in the same site, whether in operation or being decommissioned) are of several different types:

  • some of them relate to the fact that several reactors may share common buildings and facilities on the same site, and these buildings and facilities will not have to be dismantled twice;
  • certain costs are not higher when two or four reactors are dismantled on the same site. This is usually the case for surveillance costs, common equipment, and the cost of maintaining safe operating conditions on the site.

Due to mutualisation effects, dismantling a pair of reactors on the same site costs less than dismantling two standalone reactors on two different sites. In France, unlike other countries, there are no single reactors but sites with two or four, and in one case six reactors.

Series and mutualisation effects reduce the estimated decommissioning cost by 10% and 6% respectively compared to an estimate that ignores these effects. Series and mutualisation effects vary depending on the series: they are greater when there are more units in a series (series effect) and more units on a site (mutualisation effect), leading to a combined effect (series and mutualisation effect) of over 16% for the 900MW series.

In particular, series and mutualisation effects explain why it is not appropriate simply to compare the average dismantling cost per reactor between the French fleet and other countries’ nuclear fleets.

In contrast, the estimates only marginally reflect changes in productivity and the learning effect. The external audit of the decommissioning cost for the fleet currently in operation, ordered by the DGEC, considered that this approach resulted in a prudent estimation method.

For reasons of prudence, the estimate also includes an assessment of risks and uncertainties as follows:

  • incorporation of uncertainties relating to each “elementary” block of costs, series effects, mutualisation effects, transposition coefficients and fleet expenses;
  • incorporation of risks, corresponding to the completion risks (which are identifiable and quantifiable, but only contingent). These risks are currently being assessed in detail based on the initial 900MW unit (Fessenheim). Until the results are released, the financial impact of the risks and opportunities is included via a flat-rate increase.

The above method for assessing risks and uncertainties leads to an overall margin of some 16.5% for the whole fleet (20% for the first 900MW unit).

This approach, adopted in 2016, and its results were presented to the administrative authority and gave rise to further questions and discussions.

The results of this detailed approach led to limited changes overall in the cost estimate and the associated provisions at 31 December 2016, apart from the consequences of the change in the depreciation period for 900MW series plants (excluding Fessenheim) at 1 January 2016, and the effect of changes in discount rates at 31 December 2016, i.e.:

  • an increase of €321 million in the estimated decommissioning costs and an increase of €334 million in the estimated cost of long-term management of long-lived medium-level waste;
  • a decrease of €(451) million in the provision for plant decommissioning, and an increase of €162 million in the provision for long-term management of long-lived medium-level waste, with corresponding changes in the underlying assets.

After its revision in 2016, it was decided that the cost estimate would be reviewed annually. Reviews since 2017 have led to non-significant annual adjustments to this estimate.

EDF continues to confirm its analyses through an international intercomparison, taking care to identify and characterise a number of factors that could distort direct comparisons, for example differences in the scope concerned by the cost estimate, or national and regulatory contexts.

In 2020, in addition to reclassification of the amount concerning the Fessenheim plant to the provision for decommissioning of permanently shut-down plants, the following changes were made to the provisions for decommissioning of nuclear plants currently in operation:

  • the scope of these provisions includes the cost of demolishing back-up diesel facilities used in the Grand Carénage programme in 2020, resulting in a €23 million increase in the provision;
  • as explained in note 1.3.4.2, the final adoption of France’s multi-year energy programme (PPE) in April 2020 led to recognition in the Group’s financial statements of the impact of the two early reactor shutdowns to take place in 2027 and 2028 before their fifth ten-year inspection. Nuclear provisions were re-estimated based on various possible shutdown scenarios, resulting in a €32 million increase in these provisions (€26 million of which concerned provisions for decommissioning of nuclear plants in operation) via an adjustment to balance sheet assets, as announced in note 4.1 to the financial statements at 31 December 2019;
  • following the reclassifications presented in note 15.1.1 to ensure consistency with the most recent official breakdown of nuclear expenses attached to the amended ministerial order of 21 March 2007 on secure financing of nuclear expenses, an amount of €813 million corresponding to the cost of interim storage and processing of steam generators in a centralised facility was reclassified to provisions for long-term radioactive waste management.

Based on the estimates of the different types of cost, the benchmark cost to completion (in 2020 euros) for decommissioning of the first two 900MW units (Fessenheim) amounts to approximately €0.8 billion, giving an average of €0.4 billion per initial 900MW unit, compared to an average cost of €0.35 billion for the entire PWR fleet, including the series and mutualisation effects described above.

For permanently shut-down nuclear power plants

Except for the two reactors at the Fessenheim plant (for which provisions are estimated under the approach used for the PWR fleet in operation described above), decommissioning of shut-down reactors involves pilot operations corresponding to four different technologies, each with clear specificities: a PWR reactor at Chooz A (but located in a cave), UNGG (natural uranium graphite gas-cooled) reactors at Bugey, Saint-Laurent and Chinon, a heavy water reactor at Brennilis, and a sodium-cooled fast neutron reactor at Creys-Malville.

The decommissioning costs are based on contractor quotes, which take account of accumulated industrial experience, unforeseeable and regulatory developments, and the latest available figures. They have been revised annually since 2015. In 2015 the industrial decommissioning strategy for UNGG plants was totally revised. The previously selected strategy was based on a scenario involving “underwater” dismantling of caissons (UNGG reactor buildings) for four of the reactors, with direct graphite storage in a centre currently under examination by ANDRA (see note 15.1.1.2.2 “Long-lived low-level waste”). Several new technical developments showed that the alternative “in-air” dismantling solution for the caissons would improve industrial control of operations and was apparently more favourable in terms of safety, radioprotection and environmental impact. The Company therefore selected a new “in-air” dismantling scenario as the benchmark strategy for all six caissons. This scenario includes a consolidation phase, building on experience acquired from dismantling the first caisson before beginning work on the other five. The decommissioning phase will ultimately be longer than previously planned, leading to a higher estimated cost due to the induced operating charges.