Electricite de France SA

PAR:EDF

Earnings Call Transcript 2020-Q1

[Xavier Girre]

Good morning, everybody. I am very pleased to welcome you once again to this conference call. I will present you the Q1 2020 sales, starting with the main highlights over the period. I thank Etienne Dutheil, Chief of the group's nuclear division, who is online with us this morning and he is available to answer any questions you would have regarding nuclear generation. As usual, I will leave as much time as possible for the Q&A session, and this call is expected to end at 9:45 Paris time. The main highlight of this quarter is obviously the current sanitary crisis, which impacted the group in various manners. Before reviewing the financial considerations, let me present all the major actions put in place by the group, acting as a responsible and supportive company for its stakeholders. First, let me remind you that the services provided by EDF are key for the countries where it operates. In this particular period, the group has been fully mobilized to ensure continuity of service by implementing robust arrangements, for all its critical activities, reprioritizing its resources to provide energy and services to key facilities, such as health care facilities or major food retailers, for example, adapting its digital resources, during the lockdown, up to 70,000 employees were able to connect simultaneously from home in France in order to ensure continuity of business. Protecting employees and contractors via strong health procedures and maintaining operational safety. Then EDF played its role as a responsible company through various civic actions, such as setting up a EUR 2 million emergency and solidarity fund via the EDF group Foundation and supporting action against poverty in partnership with the Abbe Pierre Foundation. EDF will be funding an additional euro for every euro paid by its employees and customers. Last, EDF provided support to its customers and suppliers by granting accelerated payment of invoices to vulnerable micro, small and medium-sized suppliers in France. We have estimated at the end of April that it will represent approximately EUR 300 million of invoices and also by several measures to support its customers such as an extension of the winter break period until end of August in France, with guaranteed energy supply for all its residential customers, payment arrangements to small size business customers in accordance with government measures, similar payment facilities to its customers in Italy, Belgium and the United Kingdom. Before discussing the financial impact of the crisis, I want first to reiterate that the group enjoys a strong liquidity position with nearly EUR 29 billion of gross liquidity at end of March 2020 and EUR 10.3 billion of additional resources through fully undrawn revolving credit lines. Despite turmoiled financial markets over the last 3 months, the nuclear liabilities coverage ratio remained resilient with 99.5% coverage ratio by the dedicated assets as of 30th of April 2020. Let me remind you that should the ratio fall below 100% at year-end, the group could have 3 years to restore it. One of the most significant impacts of the crisis on the group is the extension of the outages duration in the [ nuclear ] fleet, which led to revise our assumption for French nuclear output to circa 300 terawatt hours in 2020 and between 330 and 360 terawatt hours for '21 and '22. And we have withdrawn our financial targets in this context for 2021. Newbuild projects have slowed down since mid-March, like HPC or have been temporarily interrupted, including Flamanville 3. As we will see, the lower demand in electricity is impacting the revenues of Enedis in '20. It will nevertheless be compensated in the next years through the catch-up mechanism in the regulated tariff. Supply and services businesses have also been affected by the macroeconomic slowdown. And lastly, the crisis is expected to impact also the group's working capital requirement, not only in relation with the downstream activities but also in relation with the drop in spot prices which translates into an increase in the need for CSPE compensation to renewable assets. Let me now update you with the deployment of our strategic plan CAP 2030. First, I'm glad to present you the raison d'etre of the group, which has been approved by the general assembly last week and inserted in EDF bylaws. This raison d'etre reads to build a net 0 energy future with electricity and innovative solutions and services to help save the planet and drive well-being and economic development. As a strong commitment for the good of the planet, it is our ambition to achieve carbon neutrality by 2050 and offsetting any residential emissions by compensation through negative emission projects. We announced on 26th of February 2020, along with 200 other companies worldwide, a new commitment to obtain the Science-Based Target initiative certification. As part of this, we have raised our target of direct emissions reduction from 40% to 50% by 2030 compared to 2017. We have also committed to reduce indirect emissions, known as Scope 3 for the first time, and we declared that EDF will have exited from coal-based generation by 2030 in all geographies. We achieved emissions of 9 grams per kilowatt-hours in Q1 2020 in France, which shows that we are moving in the right direction to achieve this 0 trajectory. If we move now to customers and services, there is a very encouraging resilience in the French B2C supply market share in Q1 2020, with net customers losses significantly below losses registered 1 year ago. We launched a comprehensive offer for electric mobility with our brand IZI by EDF. And last, EDF Energy has acquired a portfolio of 180,000 customers of iSupply Energy. As for renewables, in France, the French regulator, the CRE has validated 11 new projects, part of our solar plan for a total of more than 70 megawatts and 50-megawatt of wind tender has been awarded to the group. [ Abroad ] 50-megawatt of solar has been awarded in Greece. And in wind, 68 megawatts have been awarded in Poland. The deployment of our storage plan continues with various projects such as the installation of an integrated energy system made up of solar, storage and smart electric vehicle charging stations for U.S. public transport and defense company or the launch of an innovative storage solution for commercial and industrial customers in Germany, contributing to reduce both energy bills and load on the grid. Let's now move to the key figures for the first quarter of 2020. The sales of the group are almost stable, down 1% at EUR 20.7 billion. The market conditions have been favorable for electricity in France and in the United Kingdom, while unfavorable for gas for Edison, EDF SA gas activities and Dalkia. Please note that the drop in gas prices has a significant impact on the level of the sales, but no or limited effect on the margin. At end of March 2020, the impacts of the sanitary crisis are still limited on the sales of the group. As regards to group sales, this slide shows the evolution of the group sales by segment, and we'll comment them later into more details but you can see that 3 segments recorded a negative organic change in Italy, Dalkia and other activities, which are all related with the evolution in gas prices. Once again, it is worth noting that while the impact on sales is significant, it does not at all translate into a similar effect on EBITDA since it reflects lower purchase prices. The nuclear output in France was down 9.5% or minus 10.6 terawatt-hours at the end of Q1 2020 compared to Q1 2019 and of minus 10.7% at the end of April 2020. This is mainly the consequence of lesser availability of the fleet in Q1 2020 and the closure of Fessenheim's reactor 1 and increased modulation due to mild winter. The hydro output in France was up 36.4% at the end of Q1 2020. This was possible, thanks to a high level of storage at the end of 2019 and good hydro conditions in Q1 2020 versus a very weak and far below normal Q1 2019. The sales of France generation and supply activities are up by 3.5%, reaching EUR 8.4 billion. The most favorable driver is the increase in energy prices representing a positive variation of EUR 631 million. Around half is linked to the 7.7% increase, excluding taxes, in the regulated tariff in June 2019. The other half is due to a decrease in both volume and prices of the purchases on wholesale markets in Q1 2020. The energy volume effect represents a negative variation of EUR 446 million, which reflects mainly a decrease in the level of demand and lower nuclear output. The impact of the COVID-19 crisis has been estimated at minus EUR 64 million. This reflects the fact that lower demand led us to sell corresponding volumes at lower prices on the market. Sales to final customers recorded a EUR 207 million increase, thanks to a positive price effect on the capacity to the tariff catchup for the first month of 2019 and to the price of energy savings certificate. The resale of purchase obligations had a negative impact of EUR 74 million because of lower spot prices in Q1 2020 compared to Q1 2019. Regulated tariff -- regulated activities recorded an increase in sales by 1.6% to reach EUR 5.1 billion. The revision of the TURPE tariff in August 2019 had a positive effect of EUR 252 million. The mild weather at the beginning of 2020 had a negative impact estimated at EUR 117 million compared to the same period 1 year ago as less volumes were distributed. Lower distributed volumes, excluding weather and the slower activity in grid connections had a combined negative impact of EUR 93 million, of which minus EUR 77 million can be attributed to the COVID-19 crisis. EDF Renewables sales were globally stable in organic terms. The electricity output was up by a strong 8% to reach 4.3 terawatt-hours. This is a consequence of new wind farms commissioned at the end of 2019 and to very good wind conditions in Q1 2020. There is no impact of the COVID-19 crisis on the sales as the revenues of nearly all projects are secured by long-term contracts. The sales of distributed solar in the U.S.A. registered a decrease as the first quarter in 2019 had been very strong. At end of March 2020, EDF Renewables had a record level of 5.1 gross gigawatt of projects under construction. If we move to group level, renewable energy sales were down by 4% to EUR 1.2 billion. This is only the consequence of -- this is the consequence of lower power spot prices as determined by the convention we use to value hydro output in this group level KPI despite a much higher volume of hydro generation. Let's now move to energy services. Dalkia's sales decreased by 11.3% in organic terms to EUR 1.2 billion. This is mainly due to the drop in gas prices, with limited impact on the margin and to a mild weather in Q1 2020. The negative impact of the COVID-19 crisis has been estimated at minus EUR 33 million over the first quarter. At group level, sales and services activities were down by 8% in organic terms, mainly as a consequence of the decrease in gas prices here as well with no or limited impact on the margin. In France, services activities grew mainly in the B2C segment. As for Framatome, sales were up by 10.3% in organic terms. The large projects business benefited from favorable phasing effect versus Q1 2019. The fuel assembly business performed well, in particular, in the U.S.A. and in China, with the delivery of assemblies for the Taishan EPRs in Q1 2020. It is worth noting that Framatome signed a long-term service contract to support the operation of the 2 EPRs of Taishan in China and significant contracts with Tennessee Valley Authority. The impact of the COVID-19 crisis was limited to an estimated minus EUR 13 million at the end of March 2020. In the United Kingdom, sales amounted to EUR 2.7 billion for the first quarter of 2020, up 10.7% in organic terms versus last year. Generation benefited from higher nuclear realized prices and from the capacity market revenues, which were suspended in Q1 2019 and reinstated in November 2019. The nuclear output slightly decreased by 0.7 terawatt-hours to 11.9 terawatt-hours due to maintenance operations. The coal power plant of Cottam has been closed during the second part of 2019 and was therefore not part anymore of the production means of EDF Energy in Q1 2020. As for supply, there was a good resilience of the residential customers portfolio, including the takeover of the 134,000 customers of Toto Energy in Q4 2019 and EDF also acquired the portfolio of around 180,000 customers of iSupply last March. As for the B2B accounts, there was a positive effect on the sales, thanks to an increase in the number of accounts. Higher nonenergy costs were also passed through to customers and supported sales with no impact on margin. In Italy, sales registered an important decline by 25.5%. The main variation comes from the gas business with a decrease estimated at minus EUR 493 million. This is largely explained by the decrease in gas prices but with or very limited impact on the margin. To a lesser extent, there was a negative volume effect estimated at EUR 42 million due to mild weather in Q1 2020. And as far the impact of the COVID-19 crisis, it has been estimated at minus EUR 18 million at end of March 2020. If we turn now to the electricity business, the negative impact on the sales has been estimated at minus EUR 84 million because of a decrease in electricity prices and the reduction in electricity volumes linked to lower availability of the CCGT power plants for the first 2 months of 2020 and the impact of the COVID-19 crisis has been estimated at minus EUR 10 million at end of March. As for the other international segment, sales were down by 6.8%. This is driven by Belgium, where market prices were down, both for electricity and gas in the B2C and B2B segments. Volumes were also down, mainly in gas because of a mild winter in 2020. As for renewables, whereas installed wind farms reached a net capacity of 485 megawatts. The production jumped from 285 gigawatt-hours in Q1 2019 to 458 gigawatt-hours in Q1 2020, thanks to much better wind conditions. As for Brazil, sales were stable over the period. The sales of other activities were down by minus 23.4% to EUR 700 million. As already explained, the gas prices were down in Q1 2020 compared to Q1 2019. The sale of gas activities were impacted consequently with a drop by 44.5%. This reduction was emphasized by lower use of the group LNG capacities with less cargoes at the Dunkirk terminal this year. EDF Trading remained at a very high-performance level, thanks to the high level of volatility in Q1 2020, increased customer flow and favorable positions in Europe, which compensated a decrease in LNG and LPG activities. However, the global pandemic had a negative impact on trading margin estimated at minus EUR 30 million in March due to some deterioration of credit risk. To conclude, we can summarize the main variations I have just presented as follows: first, an electricity price effects for EUR 780 million -- positive electricity price effect for EUR 780 million and a gas price effect for minus EUR 680 million. Second, a weather effect at group level, mainly in France, estimated at minus EUR 271 million. Third, the COVID-19 crisis impact estimated at minus EUR 247 million on the sales. And fourth, the other elements had a positive variance of EUR 207 million, including plus EUR 73 million for Framatome. This ends my presentation. And I now open the floor to your questions. And I recall that Etienne Dutheil, the Head of our nuclear division is online to answer also your questions on nuclear generation.

[Operator]

[Operator Instructions] And your first question comes from the line of Vincent from JPMorgan.

[Vincent Jean Michel Ayral, Analyst]

I hope that everyone is safe. And at the [indiscernible] lockdown is going smoothly. And thank you for the presentation and I would say, first, thank you for giving some granularity and information on the impact on COVID. That's not something that everyone has done and -- to this level, and that's very appreciated. I'm sure there will be plenty of questions on that. One would be related to bad debt, trying to understand a bit how you see this evolving through the year. Obviously, in Q1, there probably is very limited impact, but would be interested to see how you monitor this risk for the rest of the year. Very happy to have as well someone from the new corporations here. I have to say a few people in the market understood the, I would say, quantum of the nuclear output revision. So we would be very interested, very interested in understanding the drivers, the reasons, and among other things, why we see such an impact in France when other nuclear operators in Europe do not seem to have much impact on the operations. And finally, I would say, most importantly, I want to go back to air-cooled, the nuclear regulation. We saw Ms. Borne, Energy Minister, saying that -- and it remains something very important for them, and they will resume discussion as soon as possible. Could you give us some color on where -- how things are going regarding this? Are the process still ongoing? We were expecting a report from the [ CRE ]. So has it been published, it's not public yet. You were expecting to present the restructuring this summer. Half is the time line, basically and how do you see government commitment towards this project to get it done before the 2022 elections? So these are my 3 questions.

[Xavier Girre]

Thank you for your questions. I will give the floor to Etienne in a minute about the analysis of our nuclear generation in comparison with the other countries. To answer your 2 other questions as regards the bad debt, of course, we are analyzing that. It's a bit early to give you figures for the full year impact. There may be some impact on bad debt and also on working capital requirements. So this is currently being assessed. As regard specifically bad debt, maybe we could consider an impact of a few hundred millions. But I insist this is to be confirmed. And of course, it's very early to give you precise impact for the full year impact. Your second question as regards nuclear regulation, I mean, this remains, of course, a key point for us and everything that the crisis shows also that it's an appropriate improvement to reform therein and to set up a new nuclear regulation. Discussions are still going on. And the CRE is on the eve of finalizing a report on the cost of the nuclear-generated electricity. And then, of course, the government will have to finalize its position to finalize discussions with [ Brussels ], which are still going on. And then, I mean, there is no official schedule, of course, but the work and the discussions are clearly going on. Etienne, on the nuclear generation?

[Etienne Dutheil, Director of Nuclear Production]

Yes. Thank you, Xavier. So as you said the group has put in place a strong health procedures to protect employees and contractors. And the consequences is that the work during outage takes more time than usually. And the result is that the outage itself take more time. I am -- I don't know exactly what is the situation for other operators, but of course, we have some relationships with them. And what I know is that they have the same difficulty as us and they have to protect their employees or contractors, too, of course. And the consequences on the duration of work or outages are the same. In what extent exactly, I don't know, but I think that my opinion is that the situation is not very different.

[Vincent Jean Michel Ayral, Analyst]

If I may do a follow-up on that, I mean, we have, during the Q1, talked to a number of companies being, I don't know, Engie, E.ON, Uniper. We can name the new co-operators. We have not seen such a quantum of revision enhancements. So that's why we're trying to understand what may be different. Is it that you got much lower number of people on site? Is it due to [ these annual ] reviews? Could you provide a bit more color on that? That would be very appreciated.

[Etienne Dutheil, Director of Nuclear Production]

Yes. First point is that, as I said, the work takes more time. So the duration of outages is higher, longer. And then another factor that we have to -- the modulation of generation from nuclear reactor is stronger than normally because we have to adapt to a lower demand in adoption context. And then we have taken the decision to put some reactors offline for several months to ensure that these reactors can be operational for the winter when demand will be more important. So you have 2 factors that explain lower output difficulties and lower work in outages and lower demand and our decision to put some reactor offline.

[Xavier Girre]

And maybe just to add one point to the global context and due to the importance of the nuclear generation in France for the global electricity system in France, it's absolutely key, of course, to ensure what Etienne just said, meaning -- and the proper operational availability for the winter period. And this is still a very important point. And so that's why it's so important to organize the global maintenance program in order to have the necessary availability of the reactors during the winter period. And so this is a point which certainly explains a part of the difference with some other countries in which they do not have the same importance for the global balance of the electricity system. Another question?

[Operator]

And your next question comes from the line of Emmanuel Turpin from Societe Generale.

[Emmanuel Philippe Turpin, Equity Analyst]

This is Emmanuel Turpin, Societe Generale. My first question would be the impact of COVID. Thank you very much for quantifying the impact on revenues, and indeed, the impact per business. It's good granularity, indeed. The impact at the EBITDA level must be different from business-to-business, depending on how much cost you have against those revenues, would you mind giving us your best estimate as to how this EUR 247 million impact on revenue converts to impact at the EBITDA level? Would you also mind shedding a bit of color on what would have been an equivalent impact maybe on the month of April for which we will have had much impact on the lockdown that would help us do our own estimate for the impact on Q2. The second question is about what type of operational measures you are putting in place to try and offset the financial impact of COVID. I'm thinking about maybe some efforts on OpEx. A lot of your peers are looking at variable-izing -- sorry, making variable the -- some of the fixed instance. Could you tell us about what measures you are putting place at EDF? And I expect that delays on works, whether it be in maintenance or new construction work on new projects should mean lower CapEx. Could you share with us this could represent for the full year? And lastly, drawing from this question, S&P has placed your senior net debt credit rating on negative watch. Quoting from their report, they want to see what sort of overall package you are putting in place to try and offset a negative impact of the crisis on your credit metrics short term. And my question is, to what extent is of your A- credit rating a priority for EDF at this stage? And to what extent moving down to BBB+ would be acceptable to the management and the Board, considering that BBB+ would still be the high credit rating of any European-listed utility.

[Xavier Girre]

Thank you, Emmanuel, for your questions. So different points. First, our rating by the agencies is something very important to us, as you all know. So of course, we paid the highest attention to all the decisions taken by S&P and by the other rating agencies. Secondly, as regards operational measures to offset the impact of the crisis, it's a bit too early to tell. We are first analyzing all the consequences of the COVID crisis, not only on the activity but also, of course, on the margins, on the cash. And we will adopt then appropriate action plans, of course, to preserve our financial position. And your third question, which was your first one. As regards the COVID impact on the EBITDA, highlighting that it's really a rough figure. The impact is in the range of EUR 200 million, roughly speaking, on the EBITDA for the first quarter. And maybe I could also add some point as regards the impact on the full year because I'm sure this is something of key interest for you. And as far as the full year impact is concerned, I would like first to stress the fact that the most significant impact is linked to the French nuclear generation cut. I would like also to stress that we are not in position to give precise impact today. This will depend on final output and on market conditions. But however, and to help you analyzing our 2020 financials because, of course, I understand this is a key interest for you, I can tell you that the range EUR 2.5 billion to EUR 3 billion or close to EUR 3 billion posted in most of the sales side estimates since our 16th of April update sound roughly reasonable at this stage and depending once more on final output and market conditions. The other impact, obviously, are not of the same order of magnitude. I can mention Dalkia with a drop in work activity or Enedis with less distributed volumes, for example. And I'd like also to highlight that some subsidiaries, EDF Trading, for example, have a strong start of the year and some others, notably EDF Renewables, appear very resilient, to help you analyze the full impact of the COVID for the full year.

[Operator]

And your next question comes from the line of Olivier Van Doosselaere from [ Exane ].

[Olivier Pascal Michel Van Doosselaere, Analyst of Utilities]

Yes. This is Olivier Van Doosselaere. I had 3 at this point as well, if I may, for the first one, I guess, the coverage ratio of your nuclear provisions by dedicated assets at the end of April seems quite positive. And it looks like you probably went down only 6% from the end of last year to the end of April and being actually still close to 100% right now. It might be a surprising resilience from that portfolio given that why the markets have come down clearly by much more than that. I was wondering if you could give us a bit more clarification on where this resilience comes from. And if you maybe would have transferred any of your assets into the dedicated asset portfolio in Q1 or in the month of April. Second question would actually be relating a little bit to that is that you have the asset on one side, but obviously, that is the provisions on the other, the gradual adjustment mechanism for the discount rate of the nuclear provisions, is clearly leading over time to an actual quite sizable inflation of those provisions. I'm wondering if there actually would be any ongoing talks with government and maybe with the commission and potentially as part of the wider nuclear reforms to actually change the way that the government is looking at altering this discount rate, knowing that the future new formula was maybe made at the time where actually interest rates were far higher than where we are today. And then my third question, I apologize to come again to the point of the French nuclear output, but so you mentioned that the main reason for the decrease in expected output because of longer outages. But I think even if we take into account your indicated outages for 2020, the 300 terawatt-hours of output figure seems actually quite conservative. So if I -- in the past, you used to communicate separately on load factor and availability rate, and we could quite well see that on available reactors, the load factor was above 90%. And if I would use 90% -- 340 terawatt-hours. So could you indicate why that seems a bit so conservative?

[Xavier Girre]

Yes. Thank you, Olivier, for your questions. I will leave the third one on nuclear generation to Etienne. As regards the 2 others, first, as regards the coverage ratio, yes, we are very close to 100%. This is due to the fact that we have quite a neutral position, which has helped mitigating the impact of the crisis on the market. And so our portfolio has proven to be quite resilient in this period. Value where more significantly reduced mid-March, I mean, around the 20s -- on the 25th of March as a part of the [indiscernible] prices, and then it recovered quite quick. So it appears to be quite resilient. I remind you that in our portfolio, we have nonlisted assets, on the one hand, and these nonlisted assets were increased by roughly speaking, EUR 300 million. And for the other, the listed assets, we have some shares and some rates assets. And the second ones were, of course, very resilient. So as a whole, and for [indiscernible] even these days, we are very close to 100% coverage. And we see, of course, for the remaining part of the year how it goes. And we follow that very, very closely. I can assure you, of course, for that very closing. Your second question, if I understood it properly, relates to potential reform of the discount rate regulation for nuclear liabilities. For the time being, we have nothing specific to report about that. As we have mentioned in our documents, appendices, there is a draft reform about that, that which would change the reference of the rate that is used to set this and the cap of this discount rate. But for the time being, as far as we know, it's not finalized, so I do not have anything specific to report about that. And as regards to your last question, I let the floor to Etienne.

[Etienne Dutheil, Director of Nuclear Production]

Thank you, Xavier. So due to the consequences of the [ sedentary ] increases, EDF assesses its forecast on annual nuclear output in the range of 300 terawatt-hours in 2020. And then our estimate results from a cautious approach given to the events unprecedented character of the ongoing increase and with further implications in electricity demand and duration of outages. The situation is completely new for -- as for other operators, I think. Likewise, the maintenance schedules indicated [indiscernible] are our best estimates now. It's the best estimate we are able at this stage. And as always, they are likely to be adjusted during the year.

[Operator]

And your next question comes from the line of Rob Pulleyn from Morgan Stanley.

[Robert John Pulleyn, Equity Analyst & Commodity Strategist]

So a few questions from my side. Firstly, just to revisit a familiar topic but previously, the indication was that the reform and the reorganization would be all done and ready to go by the first of January 2022 before the presidential elections in France. Is this still reasonable given the more, shall we say, condensed time frame that everyone has to work under? Secondly, yourselves and many others had to revisit the dividend from 2019 profits. Could you give us an update on the thought around the dividend for 2020 earnings which would be paid in 2021, even if it is in shares rather than cash? And lastly, just as a clarification. You guided 330 million to 360 million terawatt-hours of nuclear production for 2021 and 2022, could we just have some clarification as to which is it in each year? Or is it the midpoint for both years, i.e., could 2021 be 330 million; and 2022, 360 million? I'm just trying to understand the scheduling of the return of normalization of output.

[Xavier Girre]

Thank you very much for these questions. Etienne will take the third one. As regards the 2 others, obviously, I will not give any specific indication on the dividends for 2020, which is -- which will be decided by the Board, and the general assembly when time comes. Secondly, as regards the reform and the reorganization, I mean it's -- the work, as I said, is still going on. And as regards to the indication of January 2022, it's, of course, not a commitment, it's an indication that has been given, it's not a commitment. What I can tell you today is that the work is going on, discussions are going on also between the French state and Brussels. And then, of course, we will report when time comes for each significant event. Etienne, for the last one?

[Etienne Dutheil, Director of Nuclear Production]

Yes. As you know, since the beginning of the sanitary crisis, social distancing and enhanced [indiscernible] measures have been implemented across our nuclear fleet. And these new work conditions reduce the pace of activities, which lead us to review our generation estimates and maintenance schedules. And you know that each reactor is stopped for maintenance outage every 12 or 18 months. And every time we reschedule an outage, there is automatically a cascade effect on maintenance schedules for the following years. So rescheduling maintenance outage for 2021 and 2022 necessarily involves variations in our generation program which is no longer at the optimum value we calculated previously. So we are currently working on the adaptation of all our maintenance outage plans, and generation programs for several years on in order to construct a new optimized program. To date, we estimate that the deferral of maintenance outages planned for 2020 which has direct impact on the next 2 years leads to an annual generation forecast in the range of 330 to 360 terawatt-hours for the years 2021 and 2022.

[Robert John Pulleyn, Equity Analyst & Commodity Strategist]

Okay. If I may just ask a follow-up question, which was sort of linked to the dividend, and I appreciate that's the Board's decision, and also linking back to a previous question about the credit rating. If the credit rating is very important, and you've already pulled the lever on the dividend, what other levers could the EDF Group pull to support your capital position if that is needed?

[Xavier Girre]

Well, as I already said, I mean we are first analyzing in depth of the consequences of the crisis. And then we will elaborate proper action plans. And then, of course, we will communicate about that. Maybe just one point because it's more or less in your question. I'd like to say that a capital increase is not at all on the table. We are really running out of time, but I see that there are still a few questions. So if you agree, I'm more than pleased to welcome some additional questions.

[Operator]

And your next question comes from the line of Ajay Patel.

[Ajay Patel, Executive Director]

A few of these questions were already basically taken care of previously, but the one that plays on my mind, is there any way -- is clearly, look, there's a lot of impacts to your business over the course of this year, working capital impact that you're highlighting, the lower nuclear output for the next 3 years, the impacts from COVID, the impact on the dedicated assets. These all have an implication to leverage in the end. What I wanted to understand is how much flexibility is there in your business? Like, for example, let's take capital expenditures. What is committed and cannot be changed, and what is actually discretionary and under your control? And I'm not asking for a precise number, but maybe just a broad percentage would be helpful as a starting point. And then when you have a situation with the lower output that you describe over the next 3 years, is it as simple as just taking EUR 30 a megawatt-hour, multiplying it by the volume, which is seems to be what most people have done, or are there things that you could physically do to offset that more sort of what's possible rather than the actual numbers associated with it. I just want to really understand a little bit more what the flexibility of your business is.

[Xavier Girre]

Thank you. Thank you for your question. In fact, we are operating a wide range of activities and their characteristics are quite different. So some of them are really long-term activities based on mostly fixed cost. And this is obviously the case of the nuclear assets. And some others are very flexible. And this is, for example, the case of renewables. This is the case of services. This is the case of the supply business. This is the case of project development abroad. This is the case of our strategic program that, of course, we have set and we intend to develop, but -- which are from a strategic and financial perspective, flexible. So this is really important to manage all these portfolio of activities to give the right balance between flexibility and including financial flexibility, of course, and a clear-cut strategic view in order to give good visibility on our development. I will not be more specific today. But clearly, this is the strength of EDF to be in a position to manage these different types of businesses to develop our strategy in the long run. And there may be 1 or 2 last questions. One question?

[Operator]

And your next question comes from the line of Peter Bisztyga from Bank of America.

[Peter Andrew Bisztyga, Head of Pan]

Actually, most of my questions have been answered. But could you maybe just quickly run us through how the coronavirus crisis has impacted your supply chain in renewables and whether you expect to experience any project delays in that business?

[Xavier Girre]

Yes. Thank you for your question. Of course, coronavirus creates some difficulties, operational difficulties in the supply chain, but there will be no significant impact on our activity. And in particular, on our renewable activities you are referring to. So thank you very much. Thank you for all your questions. I hope this has been useful to you, and I wish you a very nice day. Thank you very much.