Universal Registration Document 2021

2. Risk factors and control framework

Risks related to CSR issues

A very large number of stakeholders are involved in these projects, which may, for example, need to be associated with territorial development projects or suffer from difficulties related to local acceptance.

Cyclical risks

Inflationary pressures could also lead to higher project costs (see in particular risk 4B “Operational continuity of supply chains and contractual relationships”).

The health crisis has affected the deployment of these major projects and could, if it were to worsen, lead to further delays or additional costs.

In addition, the health crisis may have weakened the financial strength of some partners.

Other issues and risks specific to nuclear activities, whether in terms of nuclear safety, control of operations and maintenance activities, long-term commitments or the fuel cycle, are specified in section 2.2.5 “Specific risks related to nuclear activities”.

c) Control actions
c1) Cross-cutting control actions
  • As part of a continuous improvement approach to project management, the Group has a project management policy and a Commitments policy which require an analysis of risks and associated security measures. Regular project reviews are carried out and the Group set up a Major Project Control unit at the end of 2020. The Group has been implementing the Excell plan since December 2019, which will enable the French nuclear industry to return to a high level of rigour and quality in order to succeed in the major projects underway and to be carried out in France, the United Kingdom and elsewhere in the world (see section 1.4.1.1.1 “The Excell plan”).
  • This project management takes into account, in accordance with EDF’s vigilance plan, the potential impacts of projects on human rights, the environment, health and safety, as well as the CSR issues of dialogue and consultation with stakeholders, territorial development, development of industrial sectors, ethics, and responsible land management (see sections 3.2, 3.3, 3.4 and 3.9).
c2) Control of committed EPR projects
1. EPR Flamanville 3 (France)

In particular, meeting the timetable and cost objectives as announced (1), is still dependent on (see section 1.4.1.1.3.1 “Flamanville 3 EPR project”) :

  • actions relating to the implementation of the rupture exclusion principle (main secondary circuit -MSC- and main primary circuit -MPC-). The most complex welding operations on the reactor building penetrations were carried out. The upgrading of all the MSC welds and the implementation of the solution accepted by the French Nuclear Safety Authority (ASN) for the treatment of the significant event relating to the three MPC connections have yet to be completed;
  • the successful completion of a new facility qualification test campaign prior to the loading of fuel into the reactor;
  • the integration of feedback from the technical hazard encountered on the Taishan 1 reactor, to be discussed with the French Nuclear Safety Authority;
  • the remainder of the examination of the last technical issues in conjunction with the French Nuclear Safety Authority (ASN) with a view to obtaining the administrative authorisations;
  • the completion of the facility’s finishings and the provision of all the necessary documentation for operation;
  • control of the consequences of ageing of equipment and materials due to the duration of the project work;
  • the possible emergence of new technical issues, particularly in the context of further work. For example, a problem with the filtration of the reactor building sumps, which are used during recirculation operation of the safety injection and enclosure spray, was identified in the summer of 2021. A solution is currently being examined by the French Nuclear Safety Authority (ASN) and the French Institute for Radiological Protection and Nuclear Safety (IRSN).

A decree of 25 March 2020 extended the maximum time limit for commissioning the reactor to April 2024

In addition to the activities still to be carried out before the fuel is loaded into the reactor vessel and the overall start-up tests are carried out, the project could also face other potentially significant additional costs and delays in the event of a new hazard. Schedule and cost to completion risks remain high; the project has no margins on either schedule or cost to completion.

2. EPR Taishan (China)

In China, the Group has a 30% stake in TNPJVC (Taishan Nuclear Power Joint Venture Company Limited) alongside its Chinese partner CGN and Guangdong Energy Group (19%). Taishan 1 was the first EPR reactor to be coupled to the grid on 29 June 2018. It was commercially operational on 13 December 2018. The Taishan 2 reactor became commercially operational on 7 September 2019 (see section 1.4.1.1.3.2 “Other New Nuclear projects”).

The EPR No. 1 reactor at the Taishan power plant started its second cycle after partial refuelling at the end of September 2020. The monitoring of the reactor gradually revealed an atypical evolution of the radiochemical parameters leading to the suspicion that the fuel rods constituting the fuel assemblies had started to leak.

According to the results of the inspection of the fuel assemblies and the reactor vessel, the loss of sealing of the assembly rods would be due to a deterioration of the rod cladding owing to a mechanical wear phenomenon, located in the lower part of the rod. This mechanical wear would be the result of the rupture of small rod hold-down systems in the assemblies (2) . In addition, a phenomenon occurring between the assemblies and a component enclosing the core has been identified, which would be linked to hydraulic stresses. Studies are underway on these phenomena and their potential impacts.

The file for the restart of the Taishan No. 1 reactor is currently being examined. In this context, there is a risk that the restart of the reactor may be delayed. Unit 2 underwent a scheduled visit, including refuelling, which was completed in June 2021.

Furthermore, the profitability of the asset is linked to the feed-in tariff for electricity produced by Taishan and could be affected if tariff decisions are not favourable. A temporary tariff was set at RMB 435/MWh until the end of 2021, for a guaranteed annual volume of generation offtake equivalent to 7,500 hours of full power operation. Any surplus above this volume is sold at the market price. As with any scalable generation facility, the actual call-up of the Taishan plant is decided by the Guangdong provincial power grid operator. The Chinese authorities have initiated consultations with the parties concerned to define the tariff conditions applicable from 2022 onwards to China’s third generation nuclear power plants, in particular the Taishan plant. A decision had not yet been taken by the authorities at the beginning of 2022. The profitability of the asset is also subject to the risk of changes in the volume of sales at this tariff, against a background of development in the electricity market.

The financing arrangements put in place by TNPJVC include provisions to secure the repayment of the joint venture’s financial liabilities. In certain situations, these provisions may temporarily limit the payment of dividends. If the company were to fail to generate a positive cumulative net result or a sufficient level of cash flow, the amount of dividends expected by EDF would be revised downwards which could result in the need for an impairment of the asset. (3)

3. Hinkley Point C – EPR (United Kingdom)

Control of the design and bringing the manufacturing and the major milestones of the Hinkley Point C (HPC) construction site under control will determine the profitability of the project and the financing of any future projects in the United Kingdom.

Construction passed a number of milestones in 2021 (see section 1.4.5.1.2.5 “United Kingdom – New Nuclear Division”), however the project was marked by :

  • lower than expected civil engineering performance;
  • delays related to the continuing impacts of the health crisis;
  • tensions in the global building materials market;
  • and the impact of Brexit.

(1) Press release of 11 January 2022

(2) See the EDF press release dated 12 January 2022: “Update on the Flamanville EPR” 

(3) The value of the share of TNPJVC’s equity at the end of 2020 in EDF’s accounts is €1,123 million – see note 12 of the appendix to the consolidated financial statements at 31 December 2021.