Universal Registration Document 2021

6. Financial statements

Once its fourth 10-year inspections are completed, the 1,300MW series of PWR plants will thus have reached a level of safety close to EPR safety level.

Also, extending operation of the 1,300MW-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 1,300MW-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, EDF considers that the best estimate for the depreciation period of the 1,300MW-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.

EDF therefore changed the estimate at 1 January 2021 for all 1,300MW power plants.

This change of accounting estimate is applied prospectively, and has the following consequences for EDF’s consolidated financial statements at 31 December 2021:

  • at 1 January 2021, due principally to timing differences in the payment schedules, provisions relating to nuclear power generation were reduced by a total €1,016 million (see note 28), including €848 million covered by dedicated This reversal from provisions is principally allocated to the net book value of the assets (€1,031 million, see note 17), with the balance allocated to profit and loss (€(15) million). It is largely taxable and generated a tax payment of €184 million;
  • in 2021:
    • the 10-year extension of the depreciation period and the reduction in the value of assets at 1 January in line with the decrease in nuclear provisions have led to a lower depreciation charge than for a 40-year depreciation period, estimated at €494 million for the year (a €562 million decrease in allocations to operating provisions (see note 11.1 (1)) and €(68) million in excess depreciation recorded for tax purposes, recognised in exceptional items),
    • the decrease in nuclear provisions at 1 January 2021 led to a €33 million decrease in the cost of unwinding the discount,
    • the amounts of contributions received on jointly-operated power plants transferred to profit and loss decreased by €23 million,
    • the decrease in the nuclear provision for last cores had an impact of

      €57 million on the exceptional result due to reversal of the provision for a related tax litigation.

In total, the various effects in 2021 lead to a €546 million increase in the income before taxes, and a €221 million increase in net income.

2.1.2 Flamanville 3 EPR
Developments in 2020

The main developments in the Flamanville project in 2020 were the following:

The second hot functional test phase which started on 21 September 2019 was completed in February 2020. Hot functional testing checks plant performance under simulated normal operating conditions.

In the context of the Covid-19 pandemic, after a cluster of cases was identified in the Manche area, work on the Flamanville site was restricted to safety, security and environment monitoring work only from mid-March. General activity on the site resumed progressively from 4 May 2020 and was back to near-normal levels in July 2020.

Functional tests of the open reactor vessel were successfully completed between 21 May and 25 June 2020.

Following the ASN’s decision of 8 October 2020 authorising partial commissioning of the EPR, the first fuel assemblies arrived at the site on 26 October and are stored in the reactor building pool.

In parallel, the upgrading work continued on non-penetration welds on the main secondary circuit that had quality deviations or did not meet the break preclusion requirements defined by EDF, and several welds were repaired in August 2020 once the ASN issued its first authorisations. EDF also decided to include the welds on the circuit supplying water to the steam generators in the scope of the repairs concerning the main secondary circuit. Qualification of the repair procedure for these welds began, with the objective of performing the work in the second half of 2021. At this stage, the repairs concerned a hundred welds in the secondary circuits.

A review was conducted in 2020 of the impact of France’s first national lockdown on the Flamanville project. This did not lead to any change to the fuel loading dates or the construction cost announced in October 2019, but it showed that the project has no remaining margin in its schedule or cost. However, achievement of the targets depends on a number of factors, notably the ASN’s examinations of EDF’s proposed methods for repairing the main secondary circuit welds, particularly the qualification of welding robots for repairing the penetration welds.

Work on these repairs could not begin until the ASN made its final decision as to approval of the entire process involving remote-controlled robots, which was deferred to the first quarter of 2021. This phase of the project is among those in the critical path for on-schedule finalisation of the EPR.

Developments in 2021

The fuel assemblies required for the first fuel load continued to arrive during the first half of the year, and the entire first core is now stored in the Flamanville 3 reactor building pool.

The process of repairing the penetration welds on the main secondary circuit using remote-controlled robots was approved by the ASN on 19 March 2021, several weeks behind the expected date, and work began on the eight welds that were not compliant with the break preclusion principle. All eight were repaired in 2021, then subjected to stress-relieving heat treatment. Demonstration of the qualification of the stress-relieving heat treatment for repairs of VVP (steam discharge pipework circuit) penetration welds was validated by the ASN, which issued authorisation for its use in late 2021. Furthermore, four ARE (steam generator water supply circuit) penetration welds also require repair, and qualification of the repair process is under way at the ASN. This process is an adaptation of the process used for VVP penetration weld repairs.

For the non-penetration welds located on the main secondary circuit that had quality deviations (this concerns 45 VVP welds and 32 ARE welds), the ASN issued approval in April 2021 for the repair of a third batch of 6 welds. In the 3 batches authorised to date, 12 weld upgrades have been completed. In April the ASN gave approval for the related regulatory checks, which are currently in process.

In total, a hundred welds (penetration and non-penetration) on the main secondary circuit are concerned by repairs to the VVP and ARE pipework. The final stage of repair for most of these welds will be an optimised stress-relieving heat treatment, prior to the final verification. Repairing these welds remains one of the key challenges on the Flamanville 3 critical pathway.

On 2 March 2021 EDF declared a significant event to the ASN, concerning incomplete application of the 2006 design standards when installing three nozzles on the main primary circuit (these nozzles connect auxiliary circuits to the primary circuit). At the request of the ASN, three scenarios were examined by the Group’s engineering teams. A file was sent to the ASN on 21 June 2021, stating that EDF’s chosen solution is to install a “containment collar”, and asking the ASN for its position on this solution, so that all the design and procurement activities could be launched by the end of 2021. In a letter of 8 October 2021 the ASN indicated that it had no objections to this solution in principle. Nonetheless the design file for the containment collar will be examined by the French Radiation protection and Nuclear Safety Institute IRSN (Institut de radioprotection et de sûreté nucléaire).