The Group considers that all the technical, economic and governance conditions for bringing the depreciation period of 1300MW-series PWR plants in France into line with its industrial strategy are now fulfilled.
The studies and work already completed, particularly concerning replacement of components and controlled equipment ageing, have given the Group sufficient assurance of the 1300MW plants’ technical capacity to operate for at least 50 years. This is also supported by the international benchmark.
The Group has also made progress with the ASN on the question of the content of the fourth 10 year inspections of the 1300MW series (a project included in the Grand Carénage programme). These inspections use a work methodology with ambitions focusing particularly on safety, similar to the fourth 10 year inspections of the 900MW series and incorporating the lessons learned from that series. In December 2019, the ASN’s response to the Re-examination Orientation file for the fourth 10-year inspections of the 1300MW reactors gave general approval for the themes selected and commitments made by EDF for these inspections.
Most importantly, the ASN approval published in February 2021 for the generic aspects of the continued operation of 900MW reactors for ten years following their fourth 10-year inspection, and the industrial success of the initial fourth 10-year inspections for such reactors (after the pilot reactor Tricastin 1 in December 2019, Bugey 2 and Bugey 4 reached 40 years of operation and were restarted after a successful fourth 10-year inspection during the first half of 2021 followed by Tricastin 2 in the second half of 2021), reinforce EDF’s confidence that its inspection content for the 1300MW series is appropriate and well controlled.
Once its fourth 10-year inspections are completed, the 1300MW PWR plants will thus have reached a level of safety close to EPR safety level.
Also, extending operation of the 1300MW-series plants beyond 40 years offers high profitability even in low long-term price scenarios, and in a range of sensitivity scenarios.
Finally, operating the 1300MW-series plants for 50 years is consistent with France’s Energy and Climate law of 8 November 2019 (which sets a target of 50% nuclear for France’s electricity output by 2035), and the adoption decree of 21 April 2020 for France’s multi-year energy programme (programmation pluriannuelle de l'énergie (PPE)). A study for the energy future, Futurs énergétiques 2050, was conducted by France’s national grid operator RTE at the request of the French government, examining electricity mix scenarios to achieve carbon neutrality in France by 2050. The related progress report published in June 2021, and the key results published on 25 October 2021, indicate a significant need for carbon-free generation capacity. For all scenarios relating to the post-2035 period, the study includes the assumption that EDF’s existing nuclear power plant fleet will remain in operation beyond 50 years, and be shut down between 50 and 60 years of operation.
In view of all these factors, the Group considers that the best estimate for the depreciation period of the 1300MW-series plants is now 50 years. This accounting estimate does not predetermine the ASN’s future decisions to authorise continued operation, which will be given individually for each unit after each 10-year inspection, as currently applied and required by law.
The Group therefore changed the estimate at 1 January 2021 for all 1300MW power plants.
This change of accounting estimate is applied prospectively, and has the following consequences for the Group’s consolidated financial statements at 31 December 2021:
the decrease in nuclear provisions at 1 January 2021 led to a €33 million decrease in the cost of unwinding the discount,
In total, the various effects in 2021 lead to a €559 million increase in the income before taxes, and a €405 million increase in EDF net income.
The significant increase in 2021 in market prices for electricity and gas, which was particularly noticeable during the second half-year and even more pronounced in the final quarter, had various effects on the Group’s financial statements that affect the comparability of certain items, as highlighted in the notes. As an illustration, between 2020 and 2021 spot baseload electricity prices in France increased by an average 240%, and the forward annual contract baseload price increased by around 113%.
The principal items concerned include, but are not limited to, the following:
In the balance sheet:
In the income statement:
In general, the high level of prices had significant upward impacts on sales (see note 5.1.2) and fuel and energy purchases (see note 5.2). The trading margin included in sales benefited from the volatility and high energy prices.
However, the profitability of certain Group entities was penalised by electricity purchases made at very high prices on the markets late in the year, in response to their own supply-demand balance, as these prices could only partially be passed on through sale prices to final customers in 2021, depending on any regulatory systems applicable. This situation particularly affected the France- Generation and supply and United Kingdom segments, and to a lesser extent the Other international segment (Belgium), and France – Regulated activities (cost of purchases to cover energy losses) (see note 5).
Note 23 presents the measures announced to date by the French and UK government to limit the impact of the market price rises for consumers in 2022.
