Universal Registration Document 2020

Emission rights held to comply with regulatory requirements on greenhouse gas emissions (the “Generation” model) are included in inventories at acquisition cost, and the FIFO (first in first out) method is applied. A write-down is recorded when the generation cost of the electricity that includes the cost of the rights is higher than the present value of that electricity. At year-end, a “net presentation” principle is applied as follows:

• an asset is recognised in raw materials inventories if the quantities of greenhouse gas emissions are lower than the number of emission rights held in the portfolio. This corresponds to the rights available to cover future greenhouse gas emissions;
• a tax liability is recorded in the opposite situation, equivalent to the rights still needed to cover emissions already produced, valued at contractualised acquisition price for forward purchases deliverable before surrender, and at market value for the balance.

The net reporting principle assumes that the emission rights held in the portfolio will be the rights used to offset emissions produced. However, there is a limit to the fungibility of rights at EDF, as there are no transfers of rights between the island and mainland activities. This can lead to concurrent recognition of an asset and a liability.

1.19.2 Certificats d’économies d’énergie (CEE)

In France, the Law of 13 July 2005 introduced a system of Energy Savings Certificates. Suppliers of energy (electricity, gas, heat, cold, domestic fuel oil and fuel for vehicles) with sales above a certain level became subject to energy savings obligations, initially for a three-year period.

To meet this obligation, three sources are available to EDF: supporting consumers in their energy efficiency operations, funding ministry-approved energy savings certificate schemes, and purchasing certificates from eligible actors.

EDF accounts for Energy Savings Certificates in compliance with Articles 616-1 to 616-25 of ANC regulation 2014-03 on the national chart of accounts.

EDF holds Energy Savings Certificates in order to meet the requirements of the regulations on energy savings. Consequently, EDF applies the “Energy Savings” model defined by the ANC regulation.

Certificates obtained or receivable are recorded in inventories at production or acquisition cost, and are valued under the FIFO (first in first out) method.

At the year-end, only the net position is presented in the financial statements:

• an asset is recognised (in work-in-progress and other inventories) if the energy savings achieved are greater than the energy savings obligations. This inventory corresponds to the certificates purchased, obtained or receivable that cover future energy savings obligations. It is consumed as and when energy sales are completed that generate energy savings obligations; or
• a liability (provision for other expenses) is recognised if the energy savings achieved are lower than the energy savings obligations. The liability corresponds to the cost of action yet to be taken to cover the obligations associated with energy sales completed. It is subsequently extinguished by making energy savings expenditures that enable the Company to obtain certificates, or by purchasing certificates.

Note 2 Événements et transactions significatifs (dont effets de la crise sanitaire)

2.1 Consequences of the Covid-19 pandemic

The economic disruption caused by the Covid-19 pandemic had significant repercussions for many of the EDF group’s activities in 2020, particularly nuclear power generation, worksites and services.

On 14 April 2020 ⁽¹⁾, the Group withdrew all its financial targets for 2020, including the lower threshold (€17.5 billion) for operating profit before depreciation and amortisation, and also for 2021. The Group was able to publish a new 2020 target for operating profit before depreciation and amortisation on 31 July 2020, setting a range of €15.2-15.7 billion. This was confirmed on 13 November 2020 when the third-quarter results were published, then revised upwards on 16 December 2020 to €16 billion or slightly more, given the greater clarity in the second half of the year regarding higher nuclear power output in the crisis context.

Nuclear power generation

As announced in the press release of 16 April 2020 (2), due to the Covid-19 crisis EDF had to make adjustments to all its activities in order to protect personnel working at its nuclear power plants. Work on the industrial maintenance programme, particularly scheduled operations during maintenance outages, was significantly affected, with a resulting reduction in the electricity generation capacity. EDF thus had to adjust its schedule of reactor outages for maintenance so as to contribute alongside the transmission operator RTE to ensuring a secure power supply throughout the winter of 2020-2021. Some reactors were consequently taken offline in order to save their fuel.

In addition, the economic slowdown during France’s lockdown led to a decline of up to 20% in electricity consumption compared to normal levels ⁽³⁾, resulting in lower use of power plants.

Due to measures taken as a result of the Covid-19 pandemic (social distancing, organisation of employee movements, limits on the number of workers on site), work took longer to complete. Consequently, nuclear reactor outages lasted longer under the twin constraints of lower employee availability and lower productivity. The industrial maintenance programme was therefore revised to adjust scheduled work to industrial capacities, and match the number of reactors in operation to requirements of the network, particularly for the winter period of 2020-2021.

This crisis also led EDF to amend the schedule for reactor outages in future years. Reactor outages depend on complex optimisation in a field subject to many constraints, such as fuel management, compliance with regulatory requirements and scheduling work to match industrial capacities, while always ensuring a balance between supply and demand for electricity, especially in the winter period. As reactor outages are scheduled several years in advance by reference to forecast network requirements and industrial resources, deferring outages from one year to the next has a knock-on effect on the maintenance programme in subsequent years and therefore on the expected power output.

EDF’s press release of 16 April 2020 consequently stated a revised estimate of annual nuclear power output in France: approximately 300TWh in 2020 (compared to between 375TWh and 390TWh as communicated on 14 February 2020), reflecting the consequences of the Covid-19 pandemic and other factors affecting availability of the nuclear fleet, and between 330TWh and 360TWh each year in 2021 and 2022.

On 2 July 2020 ⁽⁴⁾ the EDF group then announced an upward revision to this estimate of annual nuclear power output in France in 2020, to approximately 315-325TWh.