Electricite de France SA
PAR:EDF
Earnings Call Analysis
Q2-2023 Analysis
Electricite de France SA
The company held a press conference at their headquarters to present their first-half results. Luc Remont, the Chairman and CEO, alongside CFO Xavier Girre and other executive committee members, were present to introduce key results and address queries.
During the first half of 2023, the company reported a comeback in nuclear generation, improvements in other business operations, and overall growth. Nuclear output in France increased by 4 TWh from the previous year, and hydropower also saw slight gains despite poor early-year conditions. However, UK nuclear generation fell by 21.5% due to a plant shutdown and a heavy maintenance schedule. The company's renewable energy output rose by 5.6%, with a significant jump in the solar project portfolio. Reductions in thermal generation contributed to a decrease in carbon intensity by 10 grams of CO2 per kWh.
Financial performance demonstrated a strong recovery with EBITDA reaching €16.1 billion, a drastic increase from €2.7 billion in the prior period. Net income also reflected this positive trend. Net financial debt remained aligned with the company's stabilization goals, and net cash increased to €21.2 billion, indicating sound liquidity and financial health.
The company's industrial challenges, particularly stress corrosion cracking in their reactors, are being diligently managed with a majority of affected reactors repaired. The company confirmed their estimated nuclear output in France for 2023 between 300 to 330 TWh and provided a progressive outlook for 2024 and 2025 with higher production targets. This strategic progression underscores the company’s commitment to bolstering their nuclear capacity.
Strengthening their position in renewable energy, the company has seen a 7% growth in its portfolio since the end of 2022, marking significant advancements in projects such as wind farms and solar power plants. Commencing operations on France's first floating solar power plant and installing the first offshore wind turbine at Fécamp highlight the company's dedication to diversifying its low-carbon energy mix.
The company improved its guidance for the debt net to EBITDA ratio, targeting a level lower or equal to 2.5x by the end of the year. They have also set an adjusted economic debt to EBITDA target of less than or equal to 4x. This clear direction from management emphasizes their focus on maintaining financial rigor while advancing their investment program.
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Welcome to our headquarters for this press conference to present our H1 results. Thank you to all of you for making the trip in the summer, and many thanks to those who are connecting remotely. A word of introduction by Luc Remont, Chairman and CEO, and then the CFO will speak as well. You'll have the opportunity to ask questions as well.
Mr. Remont, you have the floor.
Hello, everyone. Welcome to this presentation of our Group's performance for the first-half of 2023. I have Xavier Girre, our CFO, with us. We also have a number of EXCOM members here with us to take any questions you may have. But before we do that, I would like to share with you our main performance indicators and review our highlights since we met, in February, since we presented our annual results. Today, we are going to present you with solid results which reflect a gradual return to better nuclear generation, and operational successes in all of EDF's other businesses.
Let me start with the main highlights regarding output. Let's start with nuclear output in France, which stood at 158.1-terawatt hour, that's 4-terawatt hour more than in H1 2022. This increase is due to better availability of our fleet and control of our shutdown schedule. Hydropower generation in France came to 19.4-terawatt hour, up 0.5-terewatt hour on H1 2022. This is due to persistently poor hydraulic conditions at the beginning of the year, even though there's been an improvement since then. However, the filling rate of dams at the end of June was higher than historical averages, which is good news for the summer, and the fall and the winter as well.
In the U.K., nuclear generation stood at 18.2-terewatt hour, down [21.5%] (ph) on the first-half of 2022 due to the closure of the Hinkley Point B, in August, 2022, which is having an impact on H1 2023. We also have a busier maintenance schedule in 2023. Regarding solar and wind, the Group's wind and solar output totaled 13.2-terawatt hour, up 5.6% on H1 2022. Our portfolio within solar projects worldwide reached 91-gigawatt gross, compared with 85-gigawatt at the end of 2022. This is a buoyant performance that confirms our development trajectory and potential in renewable energies.
Our carbon intensity is falling sharply because our nuclear output has gone up significantly. So, our carbon intensity stands at 40 grams of CO2 per kilowatt hour, not gigawatts; I use gigawatts way too often, I get mixed up. So, it's a reduction of 10 grams of CO2 per kilowatt hour compared with the first-half of 2022, and this is due to lower thermal generation and higher nuclear output. Overall, the Group's electricity output totaled 232-terawatt hour for H1. These results show that we are well on track to restoring high output levels even though, as you well know, we are targeting a regular and gradual increase over the next few years of our production potential. But I'll get back to that in a minute.
Now, our financial performance is up sharply from H1 2022, which was particularly difficult due to lower output in France, and the impact of a number of external measures, including regulatory measures, which were not renewed in 2023. As a result, Group EBITDA rose to €16.1 billion, compared with €2.7 billion in H1 2022. And our net income before non-recurring items follows the EBITDA trend, at €6.3 billion, compared with a negative €1.3 billion in H1 2022. Net financial debt stood at €64.8 billion, very much in line with our goal to stabilize the Group's debt. Net cash and cash equivalents, all at an excellent level, €21.2 billion, compared with €14.8 billion at the end of December, 2022.
And all of this is happening at a time when, as you know, we are at the beginning of a significant investment cycle. People expect us to be the most decarbonized energy player in the world, and we are expected to help our customers and communities embrace their energy transition. So, we're talking €25 billion per year, that's how much we invest every year. And to maintain that order of magnitude, we need to generate significant revenue, the same level of revenue as last year, while stabilizing our debt and financing future investments, both in our networks and in our current and future generation capabilities.
Moving on to the highlights that have marked the beginning of the year, on the industrial front in particular, as well on the commercial front, from an industry perspective, a progress report on stress corrosion cracking, or SCC. I would like to pay tribute to all of our teams for working relentlessly and being so industrial-minded to get our production back on track. Of the 16 reactors most sensitive to SCC, 11 have been repaired to date, two are in the process of being repaired, and two will be treated by the end of 2023, and one during its next 10-yearly inspection. This is specific phenomenon that we discussed at the end of the year, talking about the welds that were repaired during plant construction.
As you well know, we have an inspection program, and also checks and repairs are performed whenever necessary. And we are in line with our program. 60% of the 2023 program has been completed to date. So, the situation is now stabilized, and the estimate for nuclear output in France, in 2023, is confirmed in the range we announced at beginning of the year, between 300 to 330-terwatt hour. As such, as said, our target is to continue to improve year-on-year. And for 2024, we are targeting this 315 to 345-terawatt hour range. As we have just informed the market a couple of days ago, we are aiming for 335 to 365-terawatt hour for 2025. Therefore, we are confident in our ability to meet those targets, and are putting our best efforts into it.
I would like to say a few words about new nuclear power. A lot of things have been happening on this front, as I'm sure you're aware. We have filed permit applications for the construction of two nuclear reactors on the Penly site, in Normandy, at the end of June. I also welcome the Nuclear Policy Council's decision, under the aegis of the French president, to select the Bugey site, in the [Ain] (ph) region, for the construction of a pair of EPR2 reactors. This means three sites have already been selected for EPR2 reactors; Gravelines, Penly, and Bugey. This means we will continue to prepare for this major program. So, these are two key milestones in the revival of France's nuclear power program, on the scope of which is unprecedented -- well, hasn't happened since the 1990s.
With regard to the Flamanville 3 EPR, industrial operations to rework the welds on the EPR steam production circuits, initiated in 2019, have been competed. The ASN investigation will be completed in the coming weeks. We have also requested and obtained authorization from ASN, the French nuclear safety authority, to postpone the date for changing the vessel head at the end of the first operating cycle to the second-half of 2025. We can therefore confirm the start of tests will take place at the end of 2023, and that fuel loading will take place in Q1, 2024.
As you can see, we are living through a pivotal period. The degree of mastery of our construction sites is increasing by the day. Communities are eager to host our projects, and government is making decisions to support our industry. So, all in all, such a support is key to holding on to our timetable. We're still working as part of a national consensus in all the countries where we operate nuclear power plants, this means France and the U.K., so we can continue to develop those programs.
I would like to say a few words about renewables. Renewables are the second pillar of our low-carbon mix. Growth momentum continues. Our portfolio of projects has grown by 7% compared with the end of 2022. I reference the 91-gigawatt gross in projects, but there are also hands-on successes which we have secured. In particular, we have run a 1.3-gigawatt wind farm in the Irish Sea, and a 500-megawatt solar power plant in Oman. This increase in the portfolio has enabled us to maintain a high level of capacity under construction, with significant advances such as the launch of the first float for the Provence Grand Large wind turbines, one of the first such projects in France, and in the world. And also the installation of the first offshore wind turbine at Fécamp, which we are busy building and rolling out.
On the commissioning front, we are proud that we broke ground on France's first floating solar power plant, in Lazer, on a lake which is already being used to generate electricity from renewable sources via hydropower. And this enables us to double our electricity production capacity on the same site. Internationally, we also made major advances. We started construction on the largest biomass power plant in West Africa, Biovea. We started impoundment of the Nachtigal dam; we're talking 420-megawatt. This is a project in Cameroon that we've worked on for many years.
And lastly, EDF has been selected as part of a consortium; it's a team of investors to develop the Mphanda Nkuwa dam in Mozambique. This is a 1.5-gigawatt project.
I'd like to move on to our customer portfolio. Needless to say, our customers are having a hard time because the current energy prices and our top priority amid this turbulence is to maintain, [process] (ph) your customers to help them find the best possible solutions in a still difficult environment. Against this backdrop, our customer portfolio for residential electricity in France remains stable thanks to an increase in the number of customers paying market prices. And despite a decline in the portfolio of customers on fixed rate tariffs, we have secured 373,000 gas and services contracts compared with the end of December, 2022, which gives us a portfolio of 4.2 million gas and services contracts at the end of June, 2023.
Now, the end of June, 2023, we have 377,000 Tempo options, up 89% on June, 2022, which reflects a commitment to help customers consumer better, and consume less. So, this reflects our continued determination to continue to help our customers consume better and less. And of course we will continue to talk to our customers in preparation for the winter, so nobody lets down their guard. We have also taken note of the government's announcement that the regulated sales tariff, or TRV, will rise by 10% on August 1, 2023. However, this will have no significant impact on EBITDA since the energy price cap is financed by the CSPE mechanism, so there is a transfer between what used to be financed by taxpayers towards that tariff.
In the business market, we are delighted, quite obviously, with the signing of a long-term electricity supply contract with Trimet for the next 10 years, and the [extension] (ph) of the supply contract [index go] (ph) for a further 15 years. These two signings testify to our commitment to support our customers' ambitions with regard to decarbonization, and to serve them competitively and sustainably through long-term contracts. And we intend to keep increasing this contractual system in the coming months.
With regard to electric mobility, we've seen a 28% in the number charging points deployed at mandatory Group level over 12 months. This is a very fast clip.
Let me say a few words about network. We are proud to see Enedis becoming the first major company with a mission and the energy sector with a purpose, reaffirming its DNA as a responsible public utility. It plays a key role in the integration of renewable energy and electric mobility. And with a continued acceleration of the number of connections, 125% renewable energy installations this half-year, compared with the first-half of '22. An increase of 21% electric vehicle charging station connections, so there can be several stations in the same connection, and between first-half of '23 and first-half of '22. At the same time, we noted a fall in volumes carried excluding the climate effect, of 10.9-terawatt hours in the context of falling consumption.
In Italy, Edison inaugurated the Marghera Levante power plant. This is a CCGT project, innovative 780-megawatts. And it reduces CO2 emissions by 30%, and has the technological capacity to use up to 50% hydrogen, and it's a hydrogen-ready plant, if you like. Last by not least, in order to support the decarbonization of our customers and local authorities, we inaugurated the [indiscernible] geothermal plant, thanks to Dalkia. And this, 77% is powered by renewable energies, and it aims to reduce the region's carbon footprint by avoiding 11,000 tonnes of CO2 per year.
In the U.K., Dalkia signed an electrical and mechanical engineering contract with a pharmaceutical company, Evotec, and won a contract in the Middle East to operate and maintain for the operation and maintenance of the [coming] (ph) plant of the new Abu Dhabi airport terminal. This gives us an idea of the momentum we carried through to support our clients in their decarbonization strategy.
Let me now touch upon a number of recent developments over the last few months and weeks. In June, on June 8, EDF was delisted. Today, EDF is supported by a single shareholder, the state, to prepare and deploy its corporate project. And in a sense, today's meeting is evidence of this. We are setting ourselves the personal requirements of the normal company. And we keep on having those financial meetings on a regular basis, notably to keep on exchanging with you because we think this is quite critical in order to keep up trust within the financial community. From a financial point of view, we completed our 2023 financing program by issuing around €8 billion of senior and hybrid bonds in six months.
And some of those markets we did not enter for a long time. And I would like to commend Xavier and the whole of the financial division because this was managed at a very fast clip and very efficiently, and with very good results. It shows the confidence of markets in EDF's ability to be a key player in the energy transition. In addition, the three rating agencies confirmed EDF's financial rating, and under a stable outlook. It gives EDF the benefit of greater market confidence at a time when we require more borrowing at the best rates. As I said last February, the operational success of all our business is the first prerequisite for our turnaround. And this can be seen in the results we're showing today.
Now, beyond this, we want to ensure the continuity of this path, and we are working on a corporate project based on three pillars, and in showing the way that we are up to our ambition. Now, about those three pillars, the change of our operating methods and enhanced performance. Second, a robust, sustainable business, and third, a new development model. So, combining these three pillars, this project will be sustainable, and we can meet the investment challenges I mentioned earlier. With regard to the development model, we are preparing to sign, as early as September, long-term contracts with our clients' businesses. And this offers visibility and profitability to our customers. And this also means more visibility for us going forward.
So, it shows that we are present in those markets, and so there will be more profitability and visibility in terms of investment for operators. We are working on the way the Group's nuclear business operates so that the company and the industry in the best possible shape to meet the industrial challenge of extending the service life of existing nuclear power plants, combined with the launch of new nuclear power plants and France, and abroad. So, it means that all of our teams within EDF, or with our partners, should meet the best industrial standards. So, we currently changing our businesses to professionalize every one of those businesses on an industrial scale, starting with the client business line which, at the end of the day, buys very major projects.
And also the piloting of projects, so the build up a power plant in several years is quite an adventure. And we are going to do that between one to one-and-a-half per year over the coming decade, which means that we need an organization within the Group and with our partners on a very different size. And so, we want to be responsible in charge of this change in clip. Also, we need to take all those businesses, for instance engineering, or the piloting the supply chain to a more agile system in order to meet all the investment requirements, that's what we started. This means we'll have a lot of work to achieve before the end of the year in order to be fully operational at the beginning of 2024.
Now, this is in line with the four operational excellence projects that I mentioned, in February. We are deploying them, and we -- this will be at a continuous pace over the coming years because it means that for all pillars, major change will have to be undertaken. I will start with what we called -- we so-call the metal time project. It is a generic language which we use to show the client that every one of us directs to its prime job. And those that we -- it means that we have to spend as much time as possible on that. We identified 57 challenges that were fed back by our teams. So, all of these challenges are monitored by cost-cutting teams. And currently, 30% of these challenges have been met.
And it met our goals and resulted in a reduction in the processes, or work procedures involved. And we are currently trying to meet more challenges, so that, on a regular basis, we, month after month, semester -- half-after-half, we can work better together. On the second project, accelerating and industrializing digitalization. This is a far-reaching reform covering all of our businesses. We have a roadmap covering all of our businesses, and this is an end-to-end planning process. And we started the implementation of this, then extend an enterprise pilot with three manufacturers; Ponticcelli, Framatome, and Schneider Electric.
As regards the third project, developing the skills required for our businesses, we still have a lot of work to do, but we have many reasons to be satisfied. More than 8,000 jobseekers took part in the first business week, [indiscernible] organized by the Université des Métiers du Nucléaire and Pôle emploi [indiscernible]. And more than 50 schools have integrated modules on our network professions for the new school year. So, we will keep this up. We will keep mobilizing all of our employees, citizens, and people who are -- that contribute to our businesses.
Finally our last project, managing operational performance, we have set up tools for each business unit focusing on operating and cash indicators so that we can have more regular projections and greater agility. That's what I wanted to tell you.
And now, I would like to give the floor to Xavier, who will give you more details on our financial results.
Thank you, Luc. Good afternoon, everyone. I'd like to start by reviewing the key figures for the first-half of the year. Sales totaled €75.5 billion, that is an organic growth of 14.4%. Now, this EBITDA rose sharply to €16.1 billion, compared with €2.7 billion in the first-half of '22, thanks to a good overall operating performance, sustained price levels, and no exceptional regulatory measures as we had in '22. Net recurring income was €6.3 billion, in line with gross operating income, and the net result, Group share at €5.8 billion. Net financial debt was virtually stable for the half-year, at €64.8 billion in June 30, '23.
Let me now look in detail at the main factors behind the sharp rise in EBITDA. First, a significant price impact, estimated at €11.2 billion, which includes the translation of a sharp rise in electricity market prices, since summer, '21. A significant proportion of tariffs and offers are tied to the average forward price over the 24 months preceding the year of delivery. For instance, the first-half of '23 thus benefits of 18 months of high prices compared with [indiscernible] with around six months of the first-half of '22. Nevertheless, the TRV increase for customers remained limited to 15%.
Now, secondly, the exceptional regulatory measure, that is the allocation of additional 20-terawatt hours of ARENH, 46.2-megawatt hours. Now, this, in France, had penalized EBITDA by €6.2 billion, but there is no -- this did not take place this year. Now, if we look at other elements, Enedis recorded a €1.9 billion drop in EBITDA penalized by the purchase network losses at historically high prices. Operating expenses rose by €1.1 billion in the context of high inflation we are currently experiencing, which is weighing on purchasing cost and salary. Now, this should gradually return to better availability of the nuclear fleet. But you can see that the output increased by 4-terawatt hours.
First, there was a drop of 6.5-terawatt hours compared to the same quarter the previous year, and a strong increase of more than 10-terawatt hours during the second quarter, reflecting improved plant availability thanks to a strong mobilization of our teams and the progress of remediation work on stress corrosion. The impact of this improvement in account for the first-half of the year is limited as the decline of the first quarter occurred amid high spot prices, while the rise in the second quarter was due to lower prices. The favorable effect of the increase in French nuclear power generation should be more substantial in H2.
Turning to the rest of the income statement, operating income or rather -- we are seeing that this is very much in line with the EBITDA growth which itself was €13.4 billion. Now let's explain and analyze the bridge from EBITD to net income. First of all, our financial result. It's an expense of €1.5 billion. There is an improvement of €1.4 billion relative to H1 2022. There are different items here. First of all, -- first, borrowing cost of €1.9 billion, up €1.1 billion. Of which, around €0.4 billion related to new bond and short-term financing, and around €0.6 billion due to sharp rise in market rates. The average coupon rose from 1.87% at the end of June 2022 to 3.84% at the end of June 2023. As Luc said, during the half year, we virtually completed our 2023 bond issue program with around €6.4 billion of bonds issued in various markets such as U.S. dollar, the euro, sterling, and yen as well as the issue of a $1.5 billion hybrid bond.
This shows the financial markets have confidence in EDF. Likewise, agencies have maintained our financial rating. These issues are together with the reduction in the level of short-term debt of extended maturity [radius] (ph) financial debt to 10.5 years at the end of June versus 9.4 years at the end of 2022. Second element of the financial result is the good performance of dedicated assets which made a positive contribution of €1.5 billion. Their performance was 5.5% in H1 2023 compared with -8.9% in H1 2022, resulting in an increase of €4.6 billion versus H1 2022 against the backdrop of improving financial markets. Third element, net accretion totaled €1.6 billion. This is an increase of €2.5 billion versus H1 2022. It's mainly due to the stability of the real discount rate for nuclear provisions in France H1 2023 where resident increased by 30 bps in H1 2022.
I would like to remind you that when rates increase, the discount expense goes down. The rate of coverage of nuclear provisions by dedicated assets stood at 108.5% at the end of June 2023 compared with 107.1% at end December 2022. Now if we look at the tax expenses, it's tax charge which stood at €1.3 billion in H1 2023 compared with €1.8 billion tax benefit in H1 2022; a variation of €-3.2 billion. This stems from the Group's return to positive tax result. Once adjusted for non-current items notably changes in the fair value of dedicated assets, net income before nonrecurring items came to €6.3 billion as you can see at the bottom this slide. And this compares with a loss of €1.3 billion a year ago. Net attributable income is €5.8 billion versus €-5.3 billionthe previous year.
Let me now say a few words about cash flow and financial debt. EBITDA is extremely high, €18.1 billion. Now, we expected an increase in WBCO to the tune of €8 billion. And this includes €-4.3 billion related to trading activities, particularly against the backdrop of net margin cost. Second element, €-3.3 billion related to the CSPE energy price cap receivable which was not offset by lower [indiscernible] proceeds against the backdrop of falling prices.
Net investment or net capital expenditure amounted to €9.1 billion, up slightly by €0.7 million due in particular to the Hinkley Point C project, major maintenance work on the nuclear fleet, and the developmental network activities. Net financial expenses increased in the context of rising interest rates and levels, reaching €1.1 billion in the first half of 2023.
Lastly, tax disbursements amounted to €1.1 billion versus €0.2 billion for H1 2022 as a reminder. And this is due higher earnings forecasts in Italy and the U.K. It should be noted, however, that the tax disbursement for the French tax consolidation remains relatively low for this half year due to the tax consolidation deficit position in 2022. Now, conversion of OCEANE bond to the tune of €2.4 billion. These are convertible bonds. Help to strengthen shareholder's equity. All in all, net financial debt is virtually unchanged and stands at €64.8 billion at June 30, 2023 compared with €64.5 billion at the end of December 2022.
Thank you for attention, handing over to Luc Remont.
Thank you, Xavier. I would like to wrap up with a couple of prospects as I am sure you understand the entire Group is working hard with a view to achieving our objectives, supporting our investment program while stabilizing our debt. That's our number one priority for the entire Group. And against this backdrop, we are in a position to improve our guidance.
Now, we target at the end of the year, a debt net to EBITDA ratio that is lower or equal to 2.5x, and an adjusted economic debt to EBITDA target of less than or equal to 4x. I would, therefore, like to take this opportunity to let me thank you all of the EDF Group's employees for their commitment and dedication on daily basis. It is thanks to them that we are able to achieve our targets, which are ambitious.
Thank you very much. Xavier and I are on ready should you have any questions, whether you ask them in person or remotely. Thank you very much, gentlemen.
Let's start with questions from the audience. Journalist can send us their questions in writing. Go ahead.
Hello. Sharon [indiscernible]. Thank you for this presentation. Thank you for all these figures. Even though euro have not been delisted, I have a couple of questions. Please explain once again there is no foreseeable impact of the 10% increase in electricity. I am trying to understand your explanations. Please give us an update on Taishan. Have you restarted the reactor? What kind of information can you give us at this stage? And also what about your forecast so far these 300-330 terawatt hour range? Where do you stand at 179 in a [trend] (ph)? I mean you will be lower in H2, do you have leeway? Do you have a safety buffer? What is that that you are taking into account? And what else is there? The press release talks about a risk provision of €0.8 billion, which is currently being negotiated with [indiscernible]. In reference to an important contract in [indiscernible], all other things being equal, are you expecting the cost to be higher?
Thank you, Sharon. Xavier, would you like to answer the question on tariffs?
Things are rather simple. Well, there is an energy price cap via the CSPE mechanism. So, what customers don't pay is actually offset by the CSPE mechanism. So, on August 1st there was an announcement of a 10% increase in what customers will pay, which will be compensated, offset by the CSPE mechanism. So, what does that mean for EDF? Instead of having pay receivable against the government via the CSPE mechanism, the customers will pay. This means there is zero or close to zero impact on EBITDA and cash. Now regarding Taishan, the onus is on the operator to communicate about that situation because we are a minority partner. There have been no new developments in recent weeks regarding Taishan. Regarding the target ranges 300 - 330 terawatt hour. But, where did you get the 179? We stand at 158.1 for H1. So, yes, we do target 300 to 330. That's the range we are targeting. But 179, I don't know where you got that figure, the 300 to 330 range that's for output in France; absolutely, no problem.
What was your last question?
Provisions regarding the contract of [indiscernible].
Okay, go ahead, Xavier.
Let me say few words about that. This is a contract [indiscernible] contract for the 2024-'26 period, a contract for the treatment of nuclear waste. This is an in-depth renewal of [indiscernible] assets. So, yes, we had a total provision at December 31, 2022 of [€854] (ph) million. We adopt an additional provision of €1.26 billion. The total provision is €1.884 billion for that contract. And, this additional provision matches the offer we made to [indiscernible] discussions. Negotiations are underway and this reflects our vision of things. Thank you. Second question?
Hello. I have a quick question regarding SCC, stress corrosion cracking. You talked about a reactor which is to be repaired during the 10-year inspection. When has this inspection been scheduled?
I don't know.
My other questions have to do with the long-term contracts. You referenced the fact that you are preparing to sign those long-term contracts as early September. Can you tell us more about that? The number of contracts being prepared? The industrial players? The companies that you are planning to sign those contracts with? Maybe more information on prices and terms and conditions. And my question is do you think that system can be approved by the European Commission? Particularly since this would mean a lot of suppliers won't have the necessary resources for nuclear production. And this could lead to significant concentration within the industry.
And here's a bonus question. Outside those long-term contracts, what is your preference when it comes to regulation? Those long-term contracts, is that all of it for you, or how about CFD type contracts?
Now regarding SCC, the 10-yearly inspection is for the [424] (ph) reactor. And supposed to -- it's scheduled for December. There are different types of contract. I can't give you the details at this point. But, the most visible contracts in September are those contracts that will be based on market conditions over 5 years.
So, issuing such contracts which virtually do not exist at this point will provide visibility to everyone; every supplier, every industry player, everyone across the board, everyone who has access to the wholesale market. Everybody will have visibility over 5 years when it comes to access conditions for electricity. And I think this answers your question. These are mostly contracts based on market conditions. Potentially, there may be other industrial partnership contracts. But, a vast majority of those contracts are market contracts based on market conditions. And that's what I can tell you at this juncture.
[Indiscernible] Bloomberg. Two questions, regarding those contracts, do you have any idea of the volume that you will provide, and when? Second question, regarding Niger and the coup that took place yesterday, can you tell us what is the percentage of uranium that comes from Niger, or tell us some flavor of the volumes. How do you supply uranium? How do you source uranium?
On the point, we started issuing --so if we find a market with providers, suppliers, and customers who want -- who are keen on those five-year contracts, we will do more of those. Clearly, we would like those to become very significant component of the whole as not just CDF, but I would say major power utility in Europe. We want to raise the visibility -- the long-term visibility for clients, and also, more visibility in terms of revenues for operators so that they can be up to the steep curve in investments. All players have to invest to that extent in order to achieve the transition. That's what we plan purpose to our customers and suppliers types of contracts that enable them to meet that goal. As regards Niger, we don't communicate on those percentages. But, we have a strategy to diversify with major components in order not to be exposed to that kind of event. The main countries where we source uranium are Australia, Canada, the U.S., and so on. So, those are diversified sources. Thank you. Let's take an online question.
How do you finance the [indiscernible] reform and the market reform, so that there wouldn't be any CDF on current nuclear portfolio?
All of this is financed by EDF revenues. So, we keep on funding [indiscernible] on the basis of our funds. In the coming years, we want an economic model for the power industry and for EDF that will be sustainable so that our revenues can match our investments. Along these lines, we are not concerned in terms of capability to finance [indiscernible] because we want to have a sustainable economic model. That's what we -- this is setting up. And the long-term contracts I just mentioned are one -- provide one contribution that follow because they provide us with more long-term visibility.
[Indiscernible]. On the same issue, a few years ago you mentioned the need for a new consensus on electricity process in France. Can you tell us what the impact would be on individuals? Do you mean a gradual increase in prices for consumers? And then, what size and to what extent time wise?
You see, customers be they business or individuals should have energy -- an electricity consumption that the competitor, so that they can develop their businesses in France and in other countries where we operate. And for consumers, they need power electricity that be reasonable in terms of price. Clearly in the current situation, that is quite exceptional. And it is to some extent compensated by the government in terms of depreciation or rate shield. Were it not for that, it would be even more terrible for consumers and not sustainable. What we need is to go beyond the current war situation. We need an electricity economy and EDF economic business model that be comparable with the kind competition we are trying to achieve both for customers and businesses working in France. This applies to France and to all countries where we operate. It should be compatible with the huge investment requirements in this sector. We need a national consensus. Would those prices be above current prices? I don't think so. I think they would be below. Nevertheless, we need a consensus type vision so that average prices -- of course, there will be market fluctuations. But, average prices should be sustainable.
And then, we need investments. This is an industry where investment cycles are long. If we know that the current state of the economy can sustain those investments, we could lower prices. But then, we wouldn't have the same amounts of electricity. And there might be a risk of higher prices in the future. That's why what we had in mind when we said need a national consensus, we have to communicate in a better way. We have to look beyond the current situation. And, I am not minimizing the current concerns. We need to build a consensus so that both the country and EDF can build up a successful path. Thank you. Last question.
On the same issue, I understand that first of all you want EDF to be able to finance its investments by selling electricity. This is what we are about. Nevertheless, it's seems desirable or at least it looks as though we -- selling prices are going to be limited in order to protect consumers. So, would a ceiling close to cost would be good enough for you?
We can come back to this later on, but we believe that in what I said we should not forget the need to invest. That's all I have to say. There is a simple principle at work which is summarized by what we said today. We need a consensus and we should not ignore the need to invest. Maybe one more question; one or two, online.
Now you have a [sole] (ph) shareholder, but the further action by the state will not be considered. Furthermore, Emmanuel Macron mentioned the prosperity of nuclear reactors in the first [indiscernible] is that current being considered in France.
When President Macron says we should consider something, we will consider it. I think it is desirable to consider sites other than the existing sites. It should be -- it might be in the longer term. And it will not necessarily be EPR, although it might EPR as well. Another question?
Did you revise the cost of EPR2? What is the current cost? Can you increase the production generating capability of current reactors?
On EPR2, we are working on several fronts. We are working -- it's not so much revision. It is a firming up of the price components in the project. We want also to have a more mature engineering complex -- engineering system including our external suppliers. We also want a plan to scale up in order to build more reactors it must be improved, every one of them. And so, we want to scale up the plan we have. And we need a financing planning as well. We will need at least the whole of 2023 to bring together all those components so that each of those be as robust as possible, so that at the end of the day in '24, we can aim very close to a final decision making.
Decision should be made at the end of next year. So, we are currently setting up the building blocks. And, we will keep on making progress in the coming months, an increase in power capability? Yes, we are working on such a project. We believe that there is a potential 21 terawatt hour increase in generation of the current fleet. It is obviously long-term project. We are working on it in order to achieve those 21 terawatt hours. Of the last few weeks I mentioned that we wanted to increase to 400 terawatt hours in the long term. Now, we think it would be possible because in the long term, we would include the fact that we can increase the power capability of the current fleet.
Why don't we call it a day? Thank you so much for being here. And, I wish you a very pleasant summer. And, we'll see you this fall, more about our company. Thank you.