Publication of the decree and orders relating to the
March 14, 2022
Publication of the decree and orders relating to the Additional endowment of 20 TWh of ARENH volumes for 2022: update ohF the impact on the 2022 EBITDA outlook
On March 12, 2022, the Government published in the Official Journal the decree and orders of March 11, 2022 relating to the additional allocation of 20 TWh of ARENH volumes for 2022.
The decree provides that eligible suppliers, to benefit from additional ARENH volumes over the period from April 1 to December 31, 2022 at a price of €46.2/MWh, will have to sell to EDF the same volume which will be transferred to them by EDF. under this additional allocation, at a price equal to the average of the forward wholesale prices observed between December 2 and 23, 2021, for the delivery of electricity in mainland France in 2022, i.e. €257/MWh. CRE will distribute the additional ARENH volumes between the suppliers, in the same way as that followed for the delivery period started on January 1, 2022.
This decision sets the purchase price for EDF of the additional ARENH volumes of 20 TWh which must be made available to suppliers in 2022. The impact of the regulatory measures announced on January 13, 20221,3 on the Group’s EBITDA for 2022 has been estimated, for information purposes, at approximately -8.4 billion euros based on market prices as of December 31, 2021. Based on the terms defined in the Decree, and on Based on the information available to the Group at this stage, the estimate of the impact on the Group’s EBITDA for 2022 is reassessed at approximately -€10.2 billion2.
In addition, on February 7, 2022, the Group updated its estimate of French nuclear production for 2022 to 295 – 315 TWh. The impact of the drop in production compared to 2021 on the Group’s EBITDA has been estimated, at the level of the annual results3 and for information purposes, approximately -€11 billion based on 2022 forward prices as of December 31, 2021. Still for illustrative purposes, based on the information available to the Group at this stage and 2022 forward prices as of December 31, 2021. March 11, 2022, the estimate of the impact of the drop in production on the Group’s EBITDA for 2022 is reassessed at around -€16 billion.
EDF maintains its objectives at the end of 2023 of net financial debt / EBITDA around 3 times and of adjusted net debt / adjusted EBITDA4 4.5 to 5 times5.
The scale and variety of risks facing the Group, particularly in an extremely volatile market environment, as well as the analyzes and work that the Group must carry out on the French nuclear fleet in connection with the phenomenon of stress corrosion recently identified , are likely to impact the Group’s ability to achieve these objectives. Moreover, in the current situation, the impacts of the Ukrainian conflict and associated geopolitical tensions on risks of all kinds are difficult to quantify.
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A major player in the energy transition, the EDF group is an integrated energy company present in all business lines: production, transport, distribution, energy trading, energy sales and energy services. The EDF group is a world leader in low-carbon energies, having developed a diversified production mix based mainly on nuclear and renewable energies (including hydraulics). It also invests in new technologies to support the energy transition. EDF’s raison d’être is to build a net-zero energy future with electricity and innovative solutions and services, to help save the planet and promote well-being and economic development. The Group participates in the supply of energy and services to approximately 38.5 million customers (1)including 29.3 million in France (2). It achieved a consolidated turnover of 84.5 billion euros. EDF is listed on the Paris Stock Exchange.
(1) Since 2018, customers have been counted by delivery site. A customer can have two delivery points: one for electricity and another for gas.
(2) Including ÉS (Electricité de Strasbourg) and SEI.
1 Refer to the CP “Government announcements on ARENH”
2 Impact related to the regulatory measures announced on January 13, 2022. This amount includes an estimate of the impact of the tariff deferral on 2022 cash flow estimated at approximately -€0.9 million
3 Refer to the CP “2021 annual results”
4 At constant S&P methodology
5 Based on scope and exchange rates as of 01/01/2022. A stable regulatory environment (ARENH cap at 100 TWh), with forward price assumption as of December 31, 2021 for 2023, and considering a French nuclear production assumption for 2022 and 2023 as announced in the press releases of February 7 and 11, 2022