Regarding Small Modular Reactors (SMRs), development of the NUWARDTM continued in 2022. NUWARDTM is a third-generation model pressurised water plant consisting of two 170MW units, designed to be built in large numbers and widely exported. Its main target is as a replacement for fossil-fired plants in the next few decades. Sales will be backed up by a model plant in France, due to start construction by 2030.
The design of the NUWARDTM SMR is being preassessed by the ASN in collaboration with the Czech and Finnish safety authorities SUJB and STUK. The aim of this assessment is to accelerate the granting of international licences for SMRs while also giving a new impetus to regulatory harmonisation.
In December 2022, EDF and Fortum signed a cooperation agreement for joint exploration of development opportunities for SMRs and large nuclear reactors in Finland and Sweden.
In late 2022 the EDF group set up a dedicated subsidiary to lead the next part of the NUWARDTM project, the basic design phase, which will start in early 2023 and should be completed by the end of 2026. This subsidiary, named Nuward, is fully-owned by the Group. It will continue to receive engineering support from EDF, the CEA, TechnicAtome, Naval Group, Framatome and Tractebel.
A €50 million subsidy granted under the “France 2030” plan was awarded by the French State in December 2022 (see note 22 (2)) after due notification and authorisation from the European Commission. In his speech at Belfort on 10 February 2022, the French President had announced additional State support of €500 million for the NUWARDTM project.
EDF’s property, plant and equipment is reported under two balance sheet headings, as appropriate to the business and contractual circumstances of the assets’ use:
Property, plant and equipment is recorded at acquisition or production cost:
When some of the decommissioning costs for a plant are to be borne by a partner, the expected reimbursement is recognised as accrued income in the assets. The difference between the provision and the accrued income is recorded in Property, plant and equipment, and subsequent payments by the partner are deducted from the accrued income.
EDF capitalises safety expenses incurred as a result of legal and regulatory obligations sanctioning non-compliance by an administrative ban from operation.
Strategic safety spare parts for generation facilities are treated as property, plant and equipment, and depreciated over the residual useful life of the installations.
The costs of operations that are necessary for generation assets to remain in service, and are undertaken at the time of scheduled shutdowns, particularly during major inspections, are capitalised and amortised over a period corresponding to the time elapsing between two inspections.
When a part of an asset has a different useful life from the overall asset’s useful life, it is identified as an asset component and depreciated over a specific period.
Borrowing costs attributable to the financing of an asset incurred during the construction period are recognised as expenses.
Items of property, plant and equipment are depreciated on a straight-line basis over their useful life, defined as the period during which the Company expects to draw future economic benefits from their use.
The expected useful lives for the main facilities are as follows:
For concession assets, the depreciation periods take account of the duration of the concession agreement.
EDF is the operator for two types of concessions:
The accounting treatment of concessions is based on the 1975 accounting guide for concession operator firms, as there are no specific instructions in the French national chart of accounts.
EDF is the concession operator for the island public distribution networks located in Corsica and France’s overseas departments, under concession agreements based on standard concession rules approved by the public authorities. Concession agreements signed since 2018 follow the concession model negotiated in 2017 with the National Federation of Licensing Authorities (Fédération Nationale des Collectivités Concédantes et Régies - FNCCR) and France Urbaine, while other concessions follow the concession model signed with the FNCCR in 1992 (and updated in 2007).
Concession assets are reported in the balance sheet assets as property, plant and equipment operated under concessions, regardless of their initial financing, at acquisition cost or their estimated value at the transfer date when supplied by the grantor. An offsetting liability is recognised for any assets supplied for nil consideration by concession grantors.
Hydropower concessions follow standard rules approved by decree.
For concessions granted before 1999, hydropower concession assets consist solely of hydropower generation equipment (dams, pipes, turbines, etc.), while for more recent concessions, they also include hydropower generation equipment and switching facilities (alternators, etc).
Assets used in these concessions are recorded under “Property, plant and equipment operated under concessions” at acquisition cost and depreciated over their useful life.
Additional depreciation is also booked in the balance sheet liabilities for assets operated under concessions (see note 24).
Most concessions that expired before 2012 were initially for 75 years and were renewed for terms of 30 to 50 years. However, the French government has not yet renewed 28 concessions that have expired. Since their expiry these concessions have thus been in the “rolling extension” situation defined by the law, which stipulates that at the expiry date of a concession, if no new concession has been established “the concession is extended on the existing terms until such time as a new concession is granted”, so as to ensure continuity of operations in the meantime (Article L. 521-16 par. 3 of the French Energy Code).
