Highlights
Nuclear
France:
Existing nuclear:
- Increase of the nuclear output estimate for 2021 from 330-360TWh to 345-365TWh
- ASN generic decision on the conditions for the continued operation of 900MW reactors after 40 years
Flamanville 3:
- Onsite delivery of all fuel assemblies
- Start of operations to repair penetration welds on the main secondary circuit, using remotely-controlled robots, following ASN agreement
- Pending ASN decision on the treatment of three nozzles on the main primary circuit
New nuclear:
- Submission by EDF and the nuclear industry, to the public authorities, of their contribution to the programme to build 3 pairs of new ERP2 reactors in France
- Establishment of the industrial organisation for the Nuward Small Modular Reactor project
- China: anomaly in the fuel assemblies of the reactor no.1 of the Taishan nuclear power plant (3)
United Kingdom:
- Hinkley Point C: start of the equipment installation phase and progressive delivery of civil engineering in the nuclear island buildings
- Closure of Dungeness B and start of the defueling phase
- Agreement with the British government to decommission the 7 AGR nuclear power stations (4)
Renewables
- Pipeline of projects - 66GW gross capacity at end-June 2021 (5) an increase of 10% vs. end-2020:
- United States: winner of the 1.5GW offshore Atlantic Shores project (via a 50-50 joint venture) and 3 solar projects awarded for a total of more than 300MW
- France: winner of 13 ground-mounted solar projects amounting to 75MW (6) as part of the solar plan
- Capacity under construction for 8.6GW gross at end-June 2021 (7) up 8% vs end- 2020
- Commissioning of 1GW during first-half 2021 (of which a 344MW wind farm in Brazil) vs 0.6GW during the same period in 2020
- Hydropower: more than 40% of civil engineering work achieved on Nachtigal project (420MW) in Cameroon
Enedis
Strong momentum in grid connections
Finalisation of the Linky programme: circa 32.5 million Linky smart meters installed at end-June 2021, representing a 95% programme achievement
Customers and services
Commercial performance:
- Close to 1.2 million residential electricity customers in market offers in France, up 17.6% vs. end-2020
- 1.15 contracts in electricity, services and gas per customer at end-June 2021 (target of 1.5 by 2030 (8))
- Signature of renewable power purchase agreements (PPAs) with Bouygues Telecom, SNCF and RATP
Broadened offering:
- Launch of 20-year Lease-Purchase business offer for photovoltaic self-consumption
- Partnership with Bosch to launch a comprehensive energy efficiency and decarbonisation offer for industrial customers
Italy - Edison
- Reorganisation of the Group’s Italian renewable assets within Edison, with a target to achieve circa 4GW gross renewable capacity by 2030 (9)
- Disposal of the E&P business (10) finalized
Innovations
- Pre-selection, by Germany, of an industrial renewable hydrogen production project (300MW) to the IPCEI (11)
- Cooperation agreement between Toyota and EDF as part of a “Vert Electrique Auto” offer in France
- More than 144,000 charging points rolled out and managed at end-June 2021 (of which 122,000 by Pod Point, i.e. +28% vs end-2020)
- Commissioning of 50MW of batteries in the United Kingdom as part of the ESO project (12)
International
- Signature of financing agreements to build the largest biomass plant in West Africa (Biovea, 46MW, Ivory Coast)
- Signature of a development agreement for a 240MW hybrid floating solar project on the Nam Theun 2 reservoir in Laos
- Meeting on 28 July 2021 under the chairmanship of Jean-Bernard Lévy, EDF’s Board of Directors approved the consolidated financial statements at 30 June 2021.
Jean-Bernard Lévy, Chairman and Chief Executive Officer of EDF, stated: “The first half of 2021 marks a return to growth in our sales and margins after the year 2020 in decline due to the health crisis. These significantly rising results reflect in particular a strong operational performance in France and give us confidence for the rest of the year, based on the recently raised 2021 estimate on nuclear generation in France and EBITDA target. The Group EDF is resolutely continuing to implement its CAP 2030 strategy, which is reflected in significant growth in our portfolio of renewable projects, strong commercial momentum and significant progress in all our main industrial projects. I would like to thank all the Group's employees for their outstanding commitment during the health crisis and for their professionalism to support our clients and the fight against climate change.”
Prospects for reforming the existing nuclear regulatory framework in France
The French Government has indicated that the discussions with the European Commission on the ARENH reform, the hydro concessions and the overall EDF’s reorganisation have not allowed a full agreement to be reached at this stage and will have to continue, with the aim to find a satisfactory outcome for all parties involved.
The first-half 2021 organic growth of 29.8% in EBITDA compared to first-half 2020 is mainly due to an increase in nuclear output in France and a colder climate against a backdrop of rising electricity and gas prices. The growth in connection activities compared with first-half 2020 also contributed to this improvement.
Moreover, first-half 2021 EBITDA increased by 26.8% versus first-half 2019, which had not been affected by the Covid crisis. This growth was driven mainly by an increase in electricity and gas prices as well as a rise in distribution tariffs (TURPE). The performance also resulted from an excellent performance in trading activities and a decline in production taxes. The level of nuclear output in France declined by 22TWh between first-half 2021 and the same period in 2019, due to the closure of Fessenheim (-7TWh), deferrals of outages due to Covid (-6.4TWh) and an intensive maintenance schedule as part of the “Grand Carénage” programme. Nuclear output in the United Kingdom was still impacted by a number of outages.
Operational performance
Nuclear output reached 181.7TWh, up 7.7TWh compared to the same period in 2020. This change mainly reflects the following factors:
- higher demand, leading to increased use of plants in 2021. In 2020, the fleet was deeply affected by the Covid health crisis. This required high-level modulation.
- a more intensive programme of maintenance outage in 2021.
- the lack of 2021 production from the two Fessenheim reactors, which closed in first-half 2020.
- Hydropower output in France totalled 24.6TWh (1), down 1.4TWh versus the first half of 2020.
- In the United Kingdom, nuclear output was 20.9TWh, down 1.8TWh on the first half of 2020. This decrease is due to the calendar of outages and specifically the extension of that of Sizewell B.
- In Belgium, nuclear and wind output declined as compared to the first half of 2020.
EDF Renewables’ output amounted to 8.8TWh (+0.8TWh), up 10.6% in organic terms.
Extreme cold snap in Texas
During the extreme cold snap in Texas in February 2021, electricity price peaks were reported for several days. EDF Renewables shut down four wind farms and had to make energy purchases at very high prices in order to honour its contractual commitments. EDF Trading benefitted from high volatility in the commodities markets. Together, these factors had a positive impact of €49 million on the Group’s EBITDA. In addition, net income - Group share was impacted by the impairment of one of the wind farms. Overall, the event had a near-neutral impact on net income - Group share in the first half.
Cost reduction and disposal plan
To mitigate the impacts of the health crisis on the Group’s financial situation, a cost reduction and disposal plan was launched mid-2020 with a view to reducing operating expenses (2) by €500 million between 2019 and 2022 and generating approximately €3 billion in disposals (3) over the period 2020-2022. At end-June 2021, the Group has reduced costs by €251 million. The divestments through signed or completed transactions as of 29 July 2021 have a favourable effect of circa €1.2 billion on the net financial debt and of circa €1.9 billion on the economic debt of the Group (4).
Extension of 1,300MW French nuclear fleet depreciation period
The Group considers that all the technical, economic and governance conditions necessary to bring the depreciation period of its 1,300MW PWR plants in France in line with its industrial strategy have been met in the first half of 2021. As such, the Group changed this accounting estimate on 1 January 2021, for all 1,300MW series plants. The impact of the 50-year depreciation period extension on net income - Group share is +€194 million.
Net income
Financial result totalled €861 million in the first half of 2021, an improvement of €3,163 million compared to first-half 2020. This change is owing to several factors:
- the good performance of dedicated assets, up €2,666 million versus the first half of 2020
- a €114 million decrease in the cost of financial debt, attributable to refinancing operations in an environment of low rates
- the decrease in the effect of unwinding the discount on provisions of €156 million, largely owing to the decline in the discount rate for provisions for post-employment employee benefits between end-2019 and end-2020.
Restated for non-recurring items, recurring financial loss came out at -€993 million. The change in fair value of the dedicated assets portfolio of €1,859 million is not included in the calculation of net income excluding non-recurring items.
Net income excluding non-recurring items amounted to €3,740 million at the end of June 2021, up €2,473 million compared with the first half of 2020. This change mainly reflects growth in EBITDA and that of the recurring financial loss in addition to less depreciation, linked to the extended depreciation period for the 1,300MW plants.
Net income - Group share amounted to €4,172 million at the end of June 2021, up €4 873 million. Apart from the marked increase in net income excluding non-recurring items, the total includes the following items after tax:
- the change in fair value of financial instruments for €1,390 million
- income of €370 million corresponding to the settlement indemnity received under the agreement signed between EDF and Areva on 29 June 2021
- additional costs relating to to preparatory work for repairs to the main secondary circuit welds at the Flamanville 3 EPR (5), totalling €199 million
- costs related to the early closure of Dungeness B, amounting to €361 million including impairment of the plant, the fuel inventories and spare parts, and provision for penalties due under the capacity mechanism.
Cash flow and net financial debt
- Group cash flow stood at -€240 million at the end of June 2021, a significant improvement on June 2020, when it came out at -€1,829 million. This change is essentially attributable to the strong growth in EBITDA. Conversely, working capital requirement (WCR) deteriorated by €1,896 million in the first half of 2021. The change in WCR is mainly attributable to the deterioration in the WCR of the optimisation/trading activity and the seasonality of trade payables.
- Net investments amounted to €7,679 million, an increase of €691 million versus the first half of 2020 which reported a decline, owing to Covid.
- Cash flow from operations (6) totalled €566 million, up €1,082 million from the first half of 2020.
Net financial debt came to €41 billion, down following a social hybrid bond issue of €1.25 billion (9). It marks the first benchmark issue by a utility company, which was completed by EDF in May 2021.
The net impact on EBITDA of the 7.7TWh increase in nuclear output, combined with the 0.8TWh decline in hydropower output after the deduction of pumped volumes, is estimated at +€325 million.
Power prices had a positive effect on EBITDA of around €30 million. The increase in prices in the first half of 2021 had a favourable effect on energy sales in markets, which were almost offset by the increase in purchasing prices. As a reminder, in 2020, energy purchases were made at very low prices.
In the downstream market, despite the effect of customers losses for 6.6TWh, the favourable change is estimated at around €234 million, considering the positive impact of capacity prices invoiced to customers.
EBITDA also benefitted from a €257 million decrease in production taxes as part of the France Relance recovery plan.
The strong growth in EBITDA resulted from the 10.8TWh increase in volumes distributed, in line with the colder weather conditions for €204 million, as well as from growth in grid connection for an estimated amount of €174 million.
Price movements had a positive €220 million impact, in line mainly with the TURPE 5 distribution and transport indexation (12) that took place on 1 August 2020.
Furthermore, EBITDA benefitted from a €74 million reduction in production taxes as part of the France Relance recovery plan.
Lastly, it should be noted that around 32.5 million Linky smart meters had been installed as of end-June 2021, i.e. a 95% programme achievement.
Renewable energies
EDF Renewables
The extreme cold weather in Texas had a significant impact on production EBITDA estimated at €94 million. Indeed, EDF Renewables had to purchase energy at very high prices to honour its contractual commitments and had to book an impairment on one of its wind farms, leading to a negative impact on net profit.
Production increased by 10.6%, driven by a growth in commissioned capacity.
The EBITDA contribution from “Development and Sale of Structured Assets” transactions in the United States was lesser in first half of 2021 than in first half of 2020.
The reduction in the purchase price of photovoltaic electricity of more than 250kWc for purchase obligation contracts in application of the tariff decisions from July 2006, January 2010 and August 2010, which should apply from October 2021, led to a €9 million loss in value of the consolidated base and a €25 million write-off on affiliates.
Group Renewables (15)
EBITDA of all Group Renewables was up 91.4 % in organic terms. This performance is a combination of two factors:
- first, the favourable impact of the 147% increase (+€34.8/MWh) in hydro output spot prices (4)
- the negative impact of the extreme cold snap in Texas on EDF Renewables.
Energy Services
Dalkia
EBITDA growth is explained by the recovery in services and works after a first-half 2020 that was negatively impacted by the closure of many customer sites and the postponement of construction projects.
Colder temperatures and commercial activity in the United Kingdom during the first half of 2021 had a favourable impact on EBITDA. For example, we note the signature of the contract by Dalkia’s British subsidiary, Breathe, to support four hospitals benefiting from funding to improve their carbon footprints within the energy Refit framework for an amount of £100 million.
Furthermore, Dalkia finalised the disposal of its subsidiary Dalkia Wastenergy.
Group Energy Services (17)
Organic growth of 34% for Energy Services at the Group level can be attributed to the recovery in business at Dalkia and Edison after the slowdown linked to the health crisis in the first half of 2020 and the momentum in services to residential customers in France.
Net investments were down 32%, with no acquisition in the first half of 2021 equivalent to the Pod Point deal in the first half of 2020.
Framatome
The strong growth in EBITDA is explained by better production levels in “Fuel” and “Component Manufacturing” plants, partly linked to the business recovery after the health crisis and by higher sales volumes for “Large projects” and the “Installed Base” businesses, mainly in the United States.
The action plan on structural costs is progressing.
Furthermore, order intake amounted to around €2 billion at end-June 2021(20), reflecting a marked improvement versus 2020.
Lastly, Framatome finalised the acquisition of Valinox, the French manufacturer specialist of tubes for steam generators for nuclear power plants.
United Kingdom
The change in EBITDA resulted mainly from the impact of the 1.8TWh decrease in nuclear output in particular linked to the extension of the Sizewell B outage and from the sharp decline in realised nuclear prices owing to the need to buy back electricity at high prices.
The commercial activities reported growth compared with the first half of 2020, the latter having been impacted by the health crisis, particularly the business customer segment.
Italy
The strong growth in EBITDA is mainly explained by the recovery in supply and services businesses and by colder weather in 2021.
The disposal of Infrastrutture Distribuzione Gas had a positive impact on gas activities’ EBITDA of first-half 2021. However, EBITDA suffered from a contraction in margins for some gas assets.
The electricity activities reported EBITDA growth thanks to better availability of Combined Cycle Gas Turbines (CCGT) and better optimisation of electric system services. The contribution from renewable production also increased.
Note the rating upgrade by S&P to Edison’s credit rating from BBB-/A-3 to BBB/A-2.
Other international
In Belgium (24), the decline in EBITDA can be mainly attributed to reduced wind farm production, linked to less favourable wind conditions compared with 2020. Net installed wind capacity increased to 557MW (25), i.e. +1.6% compared to end-2020. Nuclear output was also down, requiring to buy back electricity at high prices.
Better availability of thermal plants enabled a good level of output and an increase in services provided to the electric system.
After the slowdown in 2020 owing to the health crisis, service activities returned to growth and supply activities held up well against a backdrop that continued to be marked by very intense competition and extension of social tariffs.
Luminus finalised the acquisition of around 330,000 customers from Essent Belgium, the Belgian gas and electricity supplier (4).
In Brazil, EBITDA was up 59.3% in organic terms thanks to the 28% increase in Power Purchase Agreement (PPA) prices in November 2020, linked to the EDF Norte Fluminense plant, and selling at high prices on the spot market. This favourable impact was partially offset by Brazilian real depreciation versus euro.
EDF signed its first service, operations and maintenance contract for the combined cycle gas plant at Marlim Azul for a 10-year term from 2022.
The increase in EBITDA for the gas business is explained by the marked improvement in medium-term and long-term United States/Europe spreads.
EDF Trading’s EBITDA (27) amounted to €608 million, an organic grow of 56.3% compared to the first half of 2020. The growth in the trading margin is attributable to a very good performance of trading activities in Europe and the United States, which benefited from significant commodity market volatility during the half-year.
