Universal Registration Document 2021

Energy savings certificates

Accounting principles and methods

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 the EDF group: supporting consumers in their energy efficiency operations, funding ministry approved energy savings certificate schemes, and purchasing certificates from eligible actors.

Expenses incurred for this purpose are recorded in expenses of the year concerned, in “Other operating income and expenses”. Expenses in excess of the accumulated obligation at year-end are included in inventories and may be used to cover the obligation in later years.

A provision is recognised if the energy savings achieved are lower than the cumulative energy savings obligation at the year-end. The amount of the provision is equal to the cost of actions still to be taken to extinguish the obligations related to the energy sales made.

Energy saving regulations in France

4^th period of the French Energy Savings Certificates Scheme (2018- 2021):

Initially planned for the period 2018-2020, the fourth period of France’s energy savings certificates scheme was extended by one year (by law no. 2019-1147 of 8 November 2019 on Energy and the Climate). This period substantially raises the energy savings obligation levels (to 1,600TWhc for the “standard” obligations and 533TWhc for the obligations intended to benefit households in situations of energy poverty), and adds a new chapter on antifraud measures concerning energy savings certificates (increasing the number and effectiveness of controls and sanctions).

If there is a shortfall in certificates surrendered at the end of the period, obligated actors must pay a fine of €15 per MWhc of shortfall.

In order to fulfil these obligations, EDF has made every effort to increase its number of energy savings certificates, taking advantage of the “Coup de pouce” operations launched in France early in 2019 (subsidies for insulation, financial aid for replacing oil heating by heat pumps, 50% additional energy savings subsidy for heat pump users, special offers for heat pump maintenance contracts, etc.).

Despite a substantial increase in the energy savings obligation in the fourth period (2018-2021) of the scheme, the EDF group met its energy savings target and has a stock of certificates for the start of the fifth period (2022 2025).

5^th period of the French Energy Savings Certificates Scheme (2022- 2025):

Decree 2021-712 on the fifth period of the energy savings certificates scheme (2022-2025) was published in the Journal officiel of 5 June 2021. The decree makes the scheme more effective (for example by significantly reducing special measures and bringing calculations close to the real savings), increases funding for very vulnerable households (higher obligations intended to benefit households in situations of energy poverty, restriction of the scope to very vulnerable households, an increase in the penalties in this category to €20/ MWhc) and encourages development of carbon-free energies:

• the overall obligation is increased by 17.2% to 2,500TWhc for this period (obligations intended to benefit households in situations of energy poverty: +37% to 730TWhc, “standard” obligations: +11% to 1,770TWhc);
• The Energy Savings Certificate coefficient (MWhc to be produced per MWh of energy sold) is reduced by 10.2% for electricity and increased by 51.8% for gas;
• for electricity and gas, the threshold below which no energy savings certificates are required is progressively reduced from the current 400GWh/year to 300GWh/year in 2022, 200GWh/year in 2023 and 100GWh/year in 2024 and subsequent years.

Note 6 Net changes in fair value on energy and commodity derivatives,
excluding trading activities

Accounting principles and methods

This item essentially consists of changes over the period in the fair value of derivatives used for economic hedging of commodity purchases or sales that are not eligible for hedge accounting as defined in IFRS 9, and are therefore included directly in profit and loss. The Group report these changes in a specific line of the income statement, “Net changes in fair value on Energy and Commodity derivatives, excluding trading activities” below the operating profit before depreciation and amortisation.