Summary : The provisions set aside by the Group for the decommissioning of nuclear facilities and for the treatment and ultimate disposal of radioactive waste, including long-lived waste from spent fuel treatment and decommissioning, may prove to be insufficient. In particular, decommissioning existing nuclear facilities may present currently unforeseen difficulties or be much costlier than anticipated. In addition, these operations must address the CSR challenge of waste management and the circular economy.
The amount of dedicated assets in France set up by the Group to cover the costs of its long-term nuclear commitments (radioactive waste and decommissioning) could prove insufficient in the event of an upward revision of the associated provisions or in the event of a decline in the value of the dedicated assets. In such a case, this amount would have to be topped up, which would have a negative impact on the Group’s cash flow, results and perspectives.
Criticality : ●● Intermediate
a) Decommissioning
The decommissioning operations underway in France (see section 1.4.1.1.2.3 “ The issues relating to the nuclear activity”) concern plants that were built and operated and are now permanently shut down, including the Superphenix plant and the Fessenheim plant permanently shut down in 2020. These operations cover four different reactor technologies: heavy water reactor (Brennilis), sodium-cooled fast reactor (Superphenix at Creys-Malville), graphite-moderated and gas-cooled reactor (NUGG reactors at Chinon, Saint Laurent and Bugey) and the pressurised water reactor (“PWR”) at Chooz A and Fessenheim.
In the United Kingdom, the two reactors at Dungeness were permanently shut down on 7 June 2021, those at Hunterston B on 26 November 2021 and 7 January 2022, respectively. Under the agreements concluded in connection with the restructuring of British Energy, the costs of decommissioning EDF Energy Nuclear Generation Group Ltd.’s existing nuclear power plants will be paid by the Nuclear Liabilities Fund (NLF). If the assets of this Fund prove insufficient, these costs will be borne by the UK Government (see section 1.4.5.1.2.2 “Nuclear generation”). In 2019, EDF Energy and the UK Government (BEIS) began discussions with a view to clarifying the conditions for implementing the above-mentioned agreements, in particular as regards determining the decommissioning costs to be recovered by EDF Energy from the Nuclear Liabilities Fund and the conditions under which the British authorities may exercise their option to acquire the nuclear power plants at the end of the defueling phase. In June 2021, an agreement was reached with the government, which specifies EDF Energy’s role in the fuel disposal phase, how and when costs will be recovered, and the terms under which the plants will be transferred to the government. This agreement updates the Nuclear Liabilities Fund Agreement (NLFA).
Main risks
- The dismantling operations underway in France are a first for EDF, and, apart from the PWR, they concern reactor technologies for which there is little or no international experience. They therefore require development of new methods and technologies that are riskier than technologies for which feedback already exists
- Neither EDF, nor any other operator, has yet undertaken a decommissioning programme on a scale comparable to that of the Group’s current PWR fleet, and the cost estimates therefore involve risks that are associated in particular with this scale effect.
- The timing and cost of the work are dependent on administrative authorisations and the availability, at the necessary time, of radioactive waste storage centres or other facilities necessary for the conditioning, treatment and storage of waste containers.
- These technical, industrial and administrative uncertainties and contingencies which might affect decommissioning projects and waste management could have an impact on the amount of provisions currently set Indeed, the assessment of the amount of these provisions is sensitive to the assumptions used for costs, planning, inflation rates and long-term discount rates, and to any change in the regulations, in particular those relating to the scope of expenses to be covered. The amount of these provisions, in accordance with the French Environmental Code, is subject to control by the administrative authority, which verifies in particular the adequacy of the provisioned expenses and imposes a cap on the discount rate for the provisions. These uncertainties and contingencies could lead to a significant revision of the amounts provided for, and the provisions made may not cover the costs actually incurred in due course. Failure to control the amount of expenditure, timing of completion and financial provisions relating to the decommissioning of nuclear facilities for which the Group is responsible would have a negative impact on the Group’s financial position and reputation (see note 15 of the appendix to the consolidated financial statements for the fiscal year ended 31 December 2021).
- In the United Kingdom, the agreements in force provide that the expenses related to the unloading and evacuation of the fuel, to be covered by the NLF, must be justified by EDF Energy and approved by the French government; failing this, they would remain the responsibility of EDF Energy.
- For nuclear power plants which EDF does not operate, but has financial interests in (China and Belgium), the Group is exposed financially in proportion to its contribution to future decommissioning costs.
Control actions
- The feedback from the PWR at Chooz A will enable consolidation, as far as possible, of the studies and estimates on the future costs of decommissioning the nuclear fleet currently in operation and Fessenheim (“second-generation” power plants).
- The Group regularly conducts an update of the key assumptions underlying the provisions (see note 15 of the appendix to the consolidated financial statements for the fiscal year ended 31 December 2021).
- The 2020-2021 DGEC audit of facilities shut down at the end of 2019 concluded that, “The costing and annual review process is robust and allows good traceability of the assumptions used and the original data. The provisions are consistent with the baseline scenarios of the projects and cover the full scope of the expenses of the audited scope.”
- Governance in terms of securing the financing of nuclear expenses has been strengthened through the development of a Group policy, validated by the Board of Directors on 30 June 2021, and the creation in 2021 of a Nuclear Expense Assessment Control Function, in accordance with Decree 2020-830 of 1 July 2020.
- In the United Kingdom, the risk of decommissioning cost recovery has been significantly reduced by the agreement with the government. Additional risk control actions are:
- maintaining the quality of relations with the government and the NDA (Nuclear Decommissioning Authority);
- strengthening monitoring and contractual compliance arrangements, as well as reporting and performance management
b) Waste management
In France, EDF is responsible for all radioactive waste produced during:
- the operation of the nuclear facilities operated by the Group;
- processing operations for spent fuel from reactors operated by EDF;
- decommissioning operations at the nuclear facilities operated by the Group (see section 4.1.1.2.3 “The issues relating to the nuclear activity – storing conditioned ultimate waste”).
In this regard, EDF has allocated provisions for the long-term management of such waste. For each category of waste (high, medium, low or very low activity), a specific management channel is identified.
