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Business and sustainable development report 2016

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1BUSINESS AND SUSTAINABLE DEVELOPMENT REPORT 2016

PERFORMANCEGRID, REGIONS AND RESPONSIBILITIES

12Actively supporting regional performance improvements

14Improving our customers’ performance

16 Improving the electricity system’s performance

INNOVATIONENERGY TRANSITION AND DIGITAL SWITCHOVER

20Innovating by combining electricity and digital technology

22Developing SmartGrids to support the regions

24Innovating to think long term

REACHING OUTINNOVATION, TALENT AND INTERNATIONAL DEVELOPMENT

28Becoming an open data stakeholder

30Supporting partnerships

32Being receptive to new working methods

1 No poverty2 Zero hunger3 Good health and well-being4 Quality education 5 Gender equality6 Clean water and sanitation7 Affordable and clean energy8 Decent work

and economic growth9 Industry, innovation

and infrastructure

10 Reduced inequalities11 Sustainable cities

and communities12 Responsible consumption

and production13 Climate action14 Life below water15 Life on land16 Peace, justice

and strong institutions 17 Partnerships for the goals

RTE’s commitment to sustainable development.

RTE supports the sustainable development goals set by the United Nations. RTE plays an active role in helping to meet some of these targets by advocating the following values:

A vibrant economy sustained by the electricity flowing across our gridHigh and ultra-high-voltage electricity powers our industries and lights up our regions. We make real-time adjustments to supply and demand.We foster regional solidarity so that everyone can have access to electricity. In France and in Europe, second by second.

The electricity system is changing more quickly than ever. In order to be prepared for the future, RTE must remain a step ahead. That is the purpose of the company’s Impulsion et Vision project, which we initiated in 2016. Improving our performance to continue fulfilling our role as a public utility. Innovating to become the first grid that combines electricity and digital technology. Reaching out to others so that the current continues to flow, whatever happens. From second to second. Yesterday, today and tomorrow.

RTE BUSINESS AND SUSTAINABLE DEVELOPMENT REPORT 2016 3 2

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François BROTTES Chairman of the RTE Executive Board

COMPOSITION OF THE RTE EXECUTIVE BOARD AS AT 31 MARCH 2017

1 François BROTTES Chairman of the RTE Executive Board

2 Clotilde LEVILLAIN Deputy managing director in charge of development & engineering, operation and services

3 Olivier GRABETTE Deputy managing director in charge of long-range planning, expertise and solutions

4 Xavier PIECHACZYK Deputy managing director in charge of networks, customers and regions

5 Valérie CHAMPAGNE Deputy managing director in charge of fi nance and procurement

6 Hervé LAFFAYEDeputy managing director in charge of European and international affairs

7 Olivier LAVOINEDeputy managing director in charge of diversifi cation & leverage

8 Bertrand SIGNÉClerical offi cer

9 Alain FIQUETDeputy managing director in charge of legal affairs & oversight

10 Didier BENYDeputy managing director in charge of human resources

“ WITHIN THE SPACE OF FIVE YEARS, THE SECTOR WILL CHANGE MORE THAN IT HAS IN THE PAST FIFTY YEARS. OUR COMPANY PROJECT IMPULSION ET VISION WILL ENSURE THAT WE ARE WELL PREPARED FOR THESE MAJOR TRANSFORMATIONS. ”

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F. B.:We are embarking upon a new era with more and more players. Renewable power is increasing and the amount of electricity fl owing across the grid can change signifi cantly at any moment. More and more electrical power is being generated and consumed locally. Decentralised storage is on the increase. Consumption is dropping as buildings are becoming more energy-effi cient and as consumer are becoming more aware. The latter are becoming full-fl edged, active players in the energy system, by decreasing or deferring their power consumption. In order to remain a step ahead, RTE is reinventing itself with its Impulsion et Vision project, initiated in 2016. Our ambition is to make the grid increasingly effi cient and fl exible so that it can adapt to real-time conditions. We are innovating by combining electricity and digital technology to rationalise usage of the existing grid whilst bringing more renewables onto our power lines, comparing like-for-like infrastructures. We are relying on our workforce’s expertise and know-how and on our ecosystem. We are developing proactive solutions with our partners. This forward-looking RTE, a central player in the energy transition at the heart of Europe, is already on the move.

€4,446Mn IN SALES, 2016

10


AS AT 31 DECEMBER 2016EXECUTIVE BOARDThe Executive Board is appointed by the RTE Supervisory Council subject to approval by the Energy Regulatory Commission (CRE). The Board has sole authority for implementing measures directly relating to the operation, maintenance and development of the public transmission system, as part of the duties assigned to the company. The 5 members of the Executive Board are appointed for a 5-year term.

François BROTTES, Chairman of the RTE Executive Board (since 1st September 2015)

Valérie CHAMPAGNE, Deputy managing director in charge of finance and procurement

Olivier GRABETTE, Deputy managing director in charge of long-range planning, expertise and solutions

Clotilde LEVILLAIN, Deputy managing director in charge of development & engineering, operation and services

Xavier PIECHACZYK, Deputy managing director in charge of networks, customers and regions

EXECUTIVE COMMITTEE The Executive Member comprises the 5 members of the Board and:

Hervé LAFFAYE, Deputy managing director in charge of European and international affairs

Alain FIQUET, Deputy managing director in charge of legal affairs & oversight

Olivier LAVOINE, Deputy managing director in charge of diversification & leverage

Bertrand SIGNÉ, Deputy managing director in charge of human resources

SUPERVISORY COUNCIL As at 31 December 2016, the Supervisory Council comprised 4 State representatives, 3 of which are appointed by the shareholder on the State’s recommendation, 4 EDF representatives (sole RTE shareholder) and 4 administrators elected by the workforce.

Administrators representing the State Didier MATHUS (Chairman) Marie-Solange TISSIER Michel PINET Thomas GOSSET, appointed by the State

Administrators representing EDF Thomas PIQUEMAL (Vice-Chairman)

Marc ESPALIEU Nicole VERDIER-NAVES Valérie LEVKOV

Administrators elected by the workforce Wilfried DENOIZAY Jean-Louis DUGAY Dominique LORET Christophe AIME

Council Secretary Alain FIQUET

New members will be appointed to the company’s Supervisory Council at the end of March 2017, following the acquisition by La Caisse des Dépôts et Consignations and CNP Assurances of 49.9% of RTE’s equity.

GOVERNANCE AND ORGANISATIONAL STRUCTURE

TODAY WE ARE INVENTING LIGHTER SOLUTIONS TO REPLACE STEEL WITH SILICON AND PLASTIC.”“Rather than developing new infrastructures to cope with spikes in supply and demand that only account for a few hours of the year, RTE is implementing evolvable and more fl exible solutions that maximise the potential of existing infrastructures. Digital technologies are fantastic tools for transforming the way in which the grid is managed, developed and operated by offering more fl exibility and adaptability.”

Olivier GRABETTE Deputy managing director in charge of long-range planning, expertise and solutions

OUR AGILITY HINGES ON OUR DAY-TO-DAYPERFORMANCE.”“Our operational and economic performance is a duty. It is achieved through the daily efforts of the RTE workforce and the 6,700 suppliers who support them. In a changing world, we must develop our ability to innovate and be more receptive to novel ideas put forward by suppliers, whilst at the same time complying with the rules of public demand and adjusting to the new transmission system user tariff set by the Energy Regulatory Commission.”

Valérie CHAMPAGNE Deputy managing director in charge of fi nance and procurement

WE ARE CAPITALISING ON OUR LEGACY, OUR GRID AND OUR WORKFORCE’S SKILLS FOR THE BENEFIT OF THE COMMUNITY.”“Through our investments, we are getting ready to operate tomorrow’s grid and thus meet the needs of our customers and of the regions, whilst supporting the energy transition, fi rst on land and then off shore. The RTE workforce is fully committed to operating the grid around the clock, as evidenced by last year’s winter.”

Clotilde LEVILLAIN Deputy managing director in charge of development & engineering, operation and services

THE WORKFORCE IS DRIVING THIS TRANSFORMATION.”“We often talk about the transformation of our electricity system using forward-looking solutions. The fi rst of these forward-looking solutions is the RTE workforce. We are relying on their professionalism and involvement to meet the challenges of our ecosystem. RTE will be investing more intensively in its workforce, supporting each worker and making sure that they achieve the highest levels of competency. Both individually and collectively.”

Xavier PIECHACZYK Deputy managing director in charge of networks, customers and regions

7 6 RTE BUSINESS AND SUSTAINABLE DEVELOPMENT REPORT 2016

AN EFFICIENT AND SUSTAINABLE GRIDRTE is a driving force behind regional planning and development: it is supporting the energy transition in France and Europe over the long term.

477 TWh*injected into the transmission system

by power plants

ELECTRICITY FLOWS IN 2016

NEW EQUIPMENT COMMISSIONED

IN 2016

46contractually binding net import

days in 2016

104.3 TWh*exchanged at the borders

(contractually binding aggregate)

30new substations including

14 RTE substations and 16 customer substations

938 kmof new

or refurbished lines

213 kmof 225-kV lines

558 kmof 150-kV, 90-kV and 63-kV lines

167 kmof 400-kV lines

105,660 kmof power lines

53.7%of regional high-voltage lines

(150, 90, 63 kV)

46.3%of ultra-high voltage lines (400, 225 kV)

for transmitting power over large distances and interconnection with neighbouring countries

22,000 kmof optical � bres

50cross-border connections

96%of the new 90-kV and 63-kV lines,

commissioned over the period of 2014 to 2016, are buried1

national grid control centre

7regional grid

control centres

1,241transformers

2,718substations

3,515delivery points

THE GRID

€4,446Mn in sales

Approx. €1.5Bnworth of capital expenditure in 2016

€403Mnnet earnings

86%customer satisfaction

€6.5MnRTE foundation supporting

352 projects since 2008

733personnel hired (2016)

72,450indirect jobs in France

€2.1Bnworth of procurement

€93Mnspent on environmental safety in 2016

99.9994%continuity of power supply

8,500employees

* billions of kWh

8

OUR INDUSTRIAL PROJECTBy naming our company project Impulsion et Vision rather than giving it a name with a target date such as RTE 2020, we wanted to emphasise that in a deeply unstable world, the priority is not to set a time limit but rather to have clear convictions and goals.

Our conviction is that the era of mechanical growth is a thing of the past. Yesterday’s solutions, which involved the systematic construction of more power lines, are no longer always appropriate because it often takes years to build infrastructures. They run the risk of becoming obsolete in a world where electrical power is evolving at an ever-increasing pace.

Our ambition is to become the fi rst European grid that combines electrical power with digital technology. In order to remain a step ahead, we need to invent more agile solutions that are more receptive to new technologies and new working methods. In order to play a pivotal role in the energy transition, we must embrace the transformations being brought about by the development of renewables and the digitised economy.

Our Impulsion et Vision project will help us to meet tomorrow’s challenges while still providing continuity of service and electrical solidarity across the board, from local and regional to European level.

PERFORMANCE

3STRATEGIC PRINCIPLES

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INNOVATION

2REACHING OUT

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PERFORMANCE

GRID, REGIONS AND RESPONSIBILITIESWhilst our performance obviously hinges on technical and economic factors, it also comprises environmental and societal considerations. We are improving the overall performance of the electricity system, both in France and in Europe. We are thus helping to improve the regions’ performance by supporting their projects. Last but not least, we are improving our customers’ performance every day by providing them with better quality of service. There was no shortage of examples in 2016.

86%The aggregate RTE customer satisfaction rate in 2016, up by 3 points compared with the previous year with a significant improvement among “industrial” customers. More than 9 out of 10 customers have commended RTE’s sales representatives for their interpersonal skills and approachability.

0086%0086%


Improving regional performance also means working hand in hand with local players to respond to emergency situations and be ready to deal with these hazards. In 2016, RTE made electrical risk prevention a key priority of its environmental safety policy.When the River Seine reached a level of 6.10 metres in Paris on the night of June 3rd 2016, the fl ood did not affect RTE facilities. However, RTE teams were perfectly prepared to respond if needed. In March 2016, RTE took part in a large-scale emergency drill organised by the Paris police authority, the purpose of which was to be prepared for the risk of a 100-year fl ood just like the one that occurred in 1910, by testing the coordination of all involved. The drill was an opportunity for further improving RTE fl ood-protection arrangements.

When raging fi res broke out across the PACA region in August 2016, RTE continued to supply the population with power while facilitating fi re-emergency response for fi re-fi ghters in an area where a high-voltage structure was located.About thirty RTE personnel worked in shifts around the clock to keep the affected areas safe by de-energising 6 power lines. Throughout the year and across the whole of France, RTE works closely with the regional fi re and rescue services, regularly designing emergency drills and scenarios like the one that took place in April 2016 at the RTE Mont-de-Marsan substation.

Accounting for nearly 50% of our sales, RTE purchases are a powerful driver of regional development and resource management improvements. The new “responsible procurement policy” signed in May 2016, where the best bidder is becoming a more important consideration in the company’s bid evaluation process, focused on four main objectives: ● Maintaining a balanced relationship with contractors

by providing suffi cient look-ahead for the coordination of contractor activities and by reducing dependency relationships,

● Maintaining satisfactory working conditions for employees and contractors by sharing health and safety at work policies and by overseeing commitments across the entire sub-contracting supply chain,

● Reducing the ecological footprint by assessing the entire life-cycle of components and eco-designed projects,

● Promoting local development by establishing the appropriate arrangements for the use of talent from regional small and medium-sized enterprises.

ACTIVELY SUPPORTING REGIONAL PERFORMANCE IMPROVEMENTS

L ocal integration is a key component of RTE’s company project. Helping

to improve regional performance entails supporting regional and urban development plans. Three concrete examples of RTE involvement in 2016: Marseille, Montpellier and Nice.

Over the period of March to September 2016, RTE was involved in the complex installation of a new underground line up to the future Château-Gombert substation, which will power the north-eastern part of the Greater Marseille Area.RTE is supporting economic growth in the region by rolling out a large-scale grid upgrade programme, as power consumption in the Greater Marseille Area has increased by more than 20% within the space of ten years. In early 2018, a new substation will therefore be commissioned in the north-east of the city. In order to connect this substation to the grid, RTE had to install two new connectors underneath a densely populated district in 2016, this underground area already being occupied by numerous infrastructures. This involved drilling down to a depth of 15 metres and along a winding route of 800 metres: a real technical feat!

In 2016, RTE was actively involved in the planning of the future high-speed line which will connect Nîmes to the city of Montpellier.In September 2016, RTE built and commissioned the high-voltage section of the Lattes “giant transformer”, a key link in the supply of electricity required for the future high-speed line connecting Nîmes to Montpellier. To ensure that Montpellier’s 272,000 inhabitants could enjoy a secure supply of electricity while this work was being performed, RTE installed bypass lines around this booming regional metropolis.

In September 2016, RTE started upgrading the 150,000-V power line running between Bancairon and Lingostière, the north-south line in the Nice-Côte d’Azur conurbation.Costing 4.6 million Euros to complete, this work will help to boost the use of renewables in the north of this conurbation, whilst accommodating a further 70 MW of additional renewable power in Alpes-Maritimes in addition to existing hydro generation capacity.

CONTINUITY OF POWER SUPPLY

With power outage frequency at a record low (0.38), continuity of service amounted to an average of 99.9994%.

This achievement was largely due to the swift response of RTE personnel following incidents involving instrument transformers, which occurred during the 2015 heatwave: the quick replacement of several impaired components signifi cantly reduced the number of potential failures. In response to actual failures, the establishment of specifi c procedures for high-temperature alerts mitigated the consequences of disrupted power supply to customers.

0078%Satisfaction rate of SME suppliers (small and medium-sized enterprise survey).

Good health and well-being

Decent work and economic growth


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In 2016, RTE continued to improve market mechanisms in an effort to leverage demand-side reductions, further enhancing its customers’ performance.Demand was reduced by nearly 10 GWh and the corresponding amount was leveraged on the electricity market. One example of innovative demand-side reduction was noted at the FerroPem plant in Montricher, Savoie, in December 2016. RTE designed a specifi c agreement for this operation, the fi rst of its kind in France. In support of the electricity system, FerroPem – a leader in silicon production with six plants directly connected to the grid – shut down one of the plant’s three ovens, thus drawing 15 MW less power from the grid and reducing its own electricity bill. More operations of this type are likely to be conducted for greater grid fl exibility.

RTE has modifi ed its “fast reserve” process, which is now more open to demand-side reduction.With the fast reserve process, RTE has continuous access to active power within less than 15 minutes, enabling it to cope with the loss of the biggest generator connected to the GRT network (1,500 MW in France).Up until now, it was the hydro fl eet that was placed in reserve for this system. In 2016, RTE worked hard to come up with potential new products for demand-response players. Result: 60% of fast reserve is now made up of demand reductions.This has brought new players onto the market as the biggest three demand-side response aggregators (Energy Pool, Novawatt and Smart Grid Energy) are new companies that did not exist fi ve years ago.

IMPROVING OUR CUSTOMERS’ PERFORMANCE

RTE is developing new services to improve its customers’ performance

and devise new solutions for minimising their energy bills.

In 2016, the real-time smart metering service geared towards industrial customers came into being.Metering data is essential for RTE customers as it tells them how much electricity has been consumed, thus enabling them to fi ne-tune their consumption. Real-time access to this data also gives RTE’s industrial customers new opportunities to collaborate with their service providers, with demand-side response aggregators or with any of the market’s IT service providers.

RTE is digitising its 8,500 metering points in order to switch to the internet protocol (IP) via a radio or hard-wired connection, thus phasing out remote metering via the telephone system. Thanks to these new near-real-time data solutions on new Services and Data portals, RTE is leading its customers towards a simpler and more standardised public data service: this unifi ed access provides fl exibility and expands on basic services.By using digital data-exchange technologies, this project provides sites that are already connected to the high-voltage grid with transparent and near-real-time access to all sorts of information pertaining to their electrical facility. In concrete terms, this provision of real-time data allows customers to remotely and accurately monitor process outages and more generally, to better oversee their business’ performance or energy impact.

TURPE 5

On 21 November 2016, the Energy Regulatory Commission (CRE) issued its conclusions setting the public transmission user tariff (TURPE): on 1 August 2017, this tariff will increase by 6.76%.A signifi cant portion of this increase is due to factors that are extraneous to RTE’s business. Investments have stabilised. Expenses are slightly up. The general trajectory is under control and regulatory conditions are driving RTE to achieve even higher levels of performance. However, RTE’s true performance is not refl ected in the net earnings of a given year but in its ability to maintain the trajectory of its controllable expenditures whilst providing its customers with high standards of service. It was precisely with this in mind that the CRE has established the framework and regulatory levels for the period of TURPE 5.

1,200smart meters installed in 2016.

CONSUMPTION

Consumption limit warning service

This service notifi es customers in near live-time by email and/or text message when their consumption reaches a pre-set limit. By closely monitoring their consumption profi les, customers are able to immediately modulate their activities or inform their supplier of consumption discrepancies.

INNOVATIVE SOLUTIONS

RTE, partnering its customers in the design of innovative solutions

In late 2016, RTE and the SNCF jointly set up a digital workshop to design an innovative and agile system for metering electricity consumption on the railway network. This workshop uses creative, collaborative and iterative design methods coupled with collective intelligence in order to come up with innovative solutions.

Industry, innovation and infrastructure


Since late 2016, Europe’s primary reserve mechanism has been optimised at RTE’s initiative.RTE has active power reserves that it uses to help maintain a balance between power generation and consumption. The primary reserve encompasses all interconnected European generators making up the Continental Europe regional group. It must be able to respond to the simultaneous loss of the two biggest generators located within this region, tantamount to 3,000 MW of capacity. The French system contributes to the tune of approximately 570 MW. Up until now, RTE was the mandatory primary reserve for generators having to hold back a portion of their capacity for primary reserve. Since the end of 2016, RTE has been pushing for optimisation of the primary reserve and together with its German, Austrian, Belgian, Dutch and Swiss counterparts, has introduced a contractual system of calls for tender. Generators that are tied into the primary reserve take part in the tender process and the most economically viable tenders are selected, thus optimising the cost of the primary reserve and the system’s performance.

The EU-funded INSPIRE-Grid research project on public participation in the power transmission process was completed in 2016.Political scientists, sociologists, psychologists and historians, to name but a few... Involving scientists from all walks of life, transmission system operators and NGOs, the purpose of this EU-funded project was to explore ways of improving the consultation process to facilitate regional integration and the construction of power transmission structures. Innovative public-information methods were piloted, proving to be more engaging and participative for regional players.

IMPROVING THE ELECTRICITY SYSTEM’S PERFORMANCE

In order to improve the electricity system’s performance, RTE is

working hard to enhance the quality of electrical power supply for the regions, in close cooperation with its European counterparts.

Improving the electricity system’s performance also means reaping the benefits of lessons learned, as demonstrated by the winter of 2016 in France, which was prepared for with neighbouring transmission system operators.The winter of 2016 was harder for RTE to deal with than usual because of the cold spell and exceptionally low levels of power output. Nevertheless, RTE managed to maintain a constant balance across the grid thanks to cooperation between European transmission system operators and an increase in import capacities, as well as exceptional levels of workforce engagement. During the cold spell, more than half of France’s population changed their energy consumption habits in order to avoid power outages, according to an IFOP survey conducted on behalf of RTE. These efforts helped to maintain minimum margins. RTE has also worked hard to support demand-side response.

In 2016, the IFA2 project entered its final phase together with National Grid, in order to build a new direct-current connector between Caen and Southampton by 2020. IFA2 is a new cross-Channel connector that will add 1GW of exchange capacity between the two countries. In order to build and operate the IFA2 connector, RTE and National Grid set up a joint subsidiary on 26 January 2017. About 100 RTE and National Grid employees were involved in the preparatory phase throughout 2016.

RTE finalises grid codes with its European partners.The administration of a regional group using 305,000 km of high and ultra-high voltage lines across 34 countries requires the establishment of standardised technical guidelines and working methods for all European TSOs: grid codes. Seven of the eight grid codes had already come into effect by late 2016 thanks to RTE’s key involvement in the process. In the spring of 2017, the eighth and final grid code will be voted on. These codes will make operation of the European transmission system safer, faster and more fluid, thus enhancing its overall performance.

JULY 2016

RTE has issued a road map for balancing the French electricity system, recommending changes to market rules. At a time of increasing need for flexibility of the electricity system in order to accommodate intermittent energy sources, coupled with changes in the European balancing guideline, it is essential that all French stakeholders prepare for the forthcoming changes.

JUNE 2016

RTE has set up a representative office in Brussels to strengthen its presence among the other European organisations.

In Brussels, the time has come to review TSO accountabilities and economic models. RTE needs to convince the European institutions of the adequacy of its integrated TSO model, combining grid development, maintenance and operation to maintain solidarity among the regions whilst supporting its customers and the community. Industry, innovation

and infrastructure

19 18

00INNOVATION

ENERGY TRANSITION AND DIGITAL SWITCHOVERSupported by a powerful R&D function, we are innovating with a grid that combines electricity and digital technology to transform our industrial system through the use of digital technologies. Optimised synergies between grid maintenance and the control of electricity � ows is one of the � rst bene� ts, supporting our customers and the community.

We are also innovating alongside our partners by supporting the smart city boom. Last but not least, we are innovating in order to think long term. Learn more about the main innovations in 2016!

€ 35Mna year will be invested in R&D over the period of 2017 to 2020.


INNOVATING BY COMBINING ELECTRICITY AND DIGITAL TECHNOLOGY

How can more renewable power be brought onto the grid with like-

for-like infrastructures? This can now be done with the new-generation substation. Numerous innovative functionalities were tested and approved in 2016!

Since 2015, a new-generation substation prototype, jointly developed by RTE, Ademe, General Electric, Schneider Electric, Nokia, Enedis and the Neelogy start-up company, is being tested at Blocaux in the Somme, a region that is spearheading the development of wind power. The most mature innovations will be gradually installed in other substations by selecting the most appropriate functionalities for the specifi c features of the different regions.

Most of the innovative principles that informed the design of the Blocaux substation were successfully tested in 2016: architecture, installation of monitoring systems, design of the communication network and equipment synchronisation within less than one microsecond.

How can we respond to short-term spikes in power generation without having to build new power lines? By using the new Ringo system designed in 2016. This system creates “virtual lines” by synchronising batteries over long distances!Building a power line is no longer the only means of absorbing intermittent spikes in generation. A highlight of year 2016 was the design of the “virtual power line”, using the Ringo system. This system comprises two batteries, which are installed at different locations in the region. The fi rst battery stores a short-term surplus of electricity whilst the second feeds exactly the same quantity of power into another area that needs it. Instead of being used for the temporal movement of electrical power, storage is being used for the spatial movement of this power. Just as if a power line were connecting both batteries without any cables or pylons!

This system does not impact on the electricity market as the incoming and outgoing loads are not altered. The grid is now able to respond to these short-term spikes whilst continuing to fulfi l its duties as a public utility, which requires it to remain neutral towards all electricity system stakeholders.

In 2016, virtual power-line feasibility studies made good progress and pilot areas for the potential installation of these batteries are now being identifi ed.

The Apogée project: artifi cial intelligence at the heart of the dispatch system.The work performed by RTE dispatchers is similar to that of switchers who monitor electricity fl ows and movement. This task is becoming more and more complex with the increasing amount of data being transmitted in real time – approaching one million data items!

This is where Apogée comes in, the fi rst module of which was created in 2016. This artifi cial intelligence system analyses data using algorithms and directly performs all routine operations. Operators can thus focus on value-added tasks and take control of the system as soon as they identify a complex problem. Apogée can also carry out simulations to prepare for and schedule forthcoming tasks.

Another highlight of 2016 was the fi rst offl ine pilot session involving operators from RTE’s control centre in Nancy. The fi rst session was a resounding success, refl ected in its positive results, identifi ed improvements and the enthusiasm of the dispatchers. In 2017, this pilot will be followed by the installation of an on-site version at RTE’s control centre in Nancy.

Year 2016 also saw more collaborative work between Apogée and other projects focusing on transmission systems of the future.

UP TO 30%!

This is the amount of allowable additional capacity per new-generation substation for accommodating renewables comparing like-for-like infrastructures.

The new-generation substation is equipped with optical fi bres and sensors that gather a large amount of data in order to maximise grid effi ciency. It even has an integrated weather station.

Affordable and clean energy

RINGO: More fl exibility for a successful

energy transition

In order to strengthen regional ties and overcome temporary, short-term grid congestion, RTE is placing batteries (connectors) in strategic locations. These connectors will partly be used as a substitute for the strengthening or construction of a new line.

Example: During spikes in wind-power generation requiring 130 GW of transmission capacity rather than the 100 GW of available capacity, Ringo temporarily holds back 30 GW in connector no. 1 and releases 30 GW in connector no. 2: a total of 130 GW is thus conveyed.

The distribution of connectors across the grid creates virtual power lines which respond to real-time needs in the form of a scalable virtual grid.

MAX 100 GW130 GW 30 GW

30 GW


00

LAUNCH OF ÉCO2MIX

On 13 April 2016, RTE launched its éCO2mix application in the Greater Paris Area. Other éCO2 city-zoom applications are expected to follow: Nantes since 21 March 2017 with Lyon close on its heels.

This new software provides real-time access to data pertaining to power consumption, the different forms of power generation, energy mixes and electricity fl ows on a metropolitan scale. Users are able to track local progress of the energy transition and are provided with visual displays of inter-regional solidarity.

DEVELOPING SMARTGRIDS TO SUPPORT THE REGIONS

RTE innovations are helping smart cities to boom and to build up

a French smart-grid industry, which is expected to create 25,000 direct jobs in 2020.

In 2016, RTE designed a raft of innovative solutions forming the bedrock of the smart grid system. These solutions have been deemed suffi ciently mature to be extensively rolled out by 2020.This bedrock fi rstly comprises solutions that get the most out of existing infrastructures.

These solutions include new-generation digital instrumentation & control systems, automatic fault-detection systems to speed up post-incident trouble-shooting and return to service, Dynamic Line Rating systems for more effi cient use of the grid depending on atmospheric conditions (wind, temperature, etc.), multiple sensors for monitoring equipment and facilitating their preventive maintenance.

All these new services are based on the development of a secure telecommunication network that covers the entire power transmission grid.This core set of services also includes measures that will optimise the use of grid data.

Numerous items of data pertaining to the electricity system are already available on our Open Data platform, via our éCO2mix application that is accessible to all members of the public. Making data accessible to everyone gives citizens the opportunity to control their consumption and play an active role in the electricity system. It also enables scientists, designers and start-ups to come up with innovative solutions in support of the energy transition.

RTE brings its innovations to regions piloting large-scale deployment of smart grids in France. Examples include active involvement in the FlexGrid project in the Provence-Alpes-Côte d’Azur (PACA) region and SMILE in Brittany and the Loire Valley.In 2016, RTE worked hard on rolling out its core set of grid innovations in these regions, which it also assisted with project design and governance. RTE has committed 10 million Euros to the FlexGrid project and 30 million Euros to the SMILE project. The latter seeks to make Western France a pioneer region in the development of smart grids.

It is probably no coincidence that those regions having submitted the most suitable applications in response to Nouvelle France Industrielle’s smart-grid call for projects are all “electrical peninsulas” in the way they are connected to the grid. These regions’ elected representatives are fully aware of the importance attached to power transmission grids and distribution networks.

Refl ecting the future challenges facing the electricity system, both these regions provide RTE with the ideal environment for rolling out innovative technical solutions and stepping up the energy transition, whilst continuing to enjoy inter-regional support. They will also help to meet the regions’ energy and climate targets by advocating the control of power consumption.

10 millionéCO2mix hits a year, providing access to 15 million pieces of data.

Sustainable cities and communities

4 NEW-GENERATION SWITCHYARDS IN BRITTANY AND THE LOIRE VALLEY BY YEAR 2020

In 2016, RTE undertook to achieve this target as part of the SMILE project.The fi rst two 225,000-V substations will be built at Bezon in central Brittany and at Merlatière in Vendée.


INNOVATING TO THINK LONG TERM

RTE must innovate to think long term, whether in an effort to leverage assets

or support sustainable development.

Using advances in digital technology to opt for equipment replacement or maintenance in the future: that is the aim of the RTE SmartLab, which started reaping results in 2016 with innovations like DataLab, AMELIE and MONA. DataLab combines a wide variety of information: RTE asset management and operational data, external data such as weather conditions, areas with dense bird populations, etc. By comparing all this data, it produces statistical analyses of failure mechanisms or failure risks in order to prioritise maintenance.

AMELIE compares Météo France data (temperature, humidity, wind) with structural characteristics in order to calculate the potential consequences of different meteorological phenomena for the grid. For instance, the model calculates the expected density of snow build-up on power lines (which is not proportional to the amount of snow on the ground) and deduces the expected response of overhead structures in order to trigger the different warning thresholds.

The MONA application (Management and Optimization of Network Assets) was developed in 2016 by RTE and the CoSMo start-up company (Complex System Modelling) specialised in the design of decision-making tools.This mathematical program is designed to leverage the value of industrial assets and to establish an optimal economic balance between the replacement and maintenance of a component. Simulation models are being used to proactively defi ne maintenance and investment policies whilst also simulating different versions of an asset management strategy.

08%Drop in the number of pages printed by RTE in 2016.In 2016, RTE continued its involvement with the Green IT club, which implements concrete measures to reduce the ecological footprint of IT systems.

Following on from the success of the EU-funded LIFE programme launched together with its Belgian counterpart Elia to support biodiversity underneath power lines, RTE is seeking to extend this initiative to new pilot regions.Since 2011, RTE has been piloting alternative solutions for the management of vegetation underneath its power lines (pastures, forest margins, orchards, etc.). Announced at the IENE 2016 international conference, the outcomes of the LIFE project were shown to be conclusive from an environmental, societal and fi nancial perspective, with a real return on investment. RTE has therefore decided to explore the possibility of deploying these innovative solutions to other regions in France.

Up until March 2016, RTE was actively involved in the large-scale EU-funded iTesla research project.This project is a new-generation platform that was jointly developed with 20 transmission system operators, universities and software companies. This platform analyses projected grid conditions. The underlying objective is to optimise safety margins through the avoidance of excessive and costly margins while continuing to ensure safe grid operation.

“ADVANCED”

The level obtained by RTE in 2016 for its contribution to societal and environmental responsibility. This

is the highest distinction awarded by the United Nations Global Compact and has been achieved by only 10% of the 600 businesses belonging to the Global Compact, a club which enables businesses to exchange good practices in the area of sustainable development. This business and sustainable development report describes the sustainable development targets that RTE has undertaken to meet.

A NEW R&D ROADMAP FOR THE PERIOD SPANNING 2017 TO 2020

Energy & environmental transition, digitisation of the economy and accelerated development

of renewables are just some of the examples illustrating the signifi cant changes currently underway in the European electricity system. Against this backdrop, RTE’s R&D function must take advantage of the numerous technological advances that are opening up new perspectives.

With this new R&D roadmap, RTE intends to be well prepared for changes in the electricity system, thus enabling it to build the company of the future.

The roadmap includes an ambitious research programme called “Environment and Society”,

which seeks to prepare the grid for the future by making sustainable long-term decisions for the environment and for society as a whole. RTE has undertaken to ensure that eco-design becomes the methodological basis for all projects. In 2016, RTE carried out life-cycle assessments, energy audits and a review of its greenhouse-gas emissions.

Climate action

Responsible consumption and production

Life on land

Industry, innovation and infrastructure

DID YOU KNOW?

RTE is a valuable contributor to the fi ght against climate change by

developing alternatives to SF6 gas.

In urban environments, gas-insulated substations use an insulating gas known as sulphur hexafl uoride (SF6), of which the greenhouse effects are 23,000 times more powerful than CO2. RTE is still striving to improve its maintenance of existing facilities whilst continuing to seek alternative solutions. For the fi rst time ever in Europe, a substation in the gulf of Saint-Tropez will be equipped with G3 technology using a gas with reduced greenhouse effects, currently being developed together with GE Grid.

27 26 26 27

REACHING OUT

INNOVATION, TALENT AND INTERNATIONAL DEVELOPMENTWe are living off the wealth of our ecosystem. We are developing Open Data because we want to support the emergence of innovations relating to this data. We are fostering partnerships with our stakeholders. Last but not least, we are becoming more and more receptive to new working methods that harness the energies of our talented workforce. 2016 abounded with this kind of initiative…

0077%of RTE employees were provided with training to improve their future skills.

In 2016,


Since March 2016, RTE has been publishing its data on a dedicated platform: https://opendata.rte-france.com.This platform already provides data from RTE’s electricity report, presented in large sections (power generation per energy type, consumption, import-export, data about the grid, etc.). Designed as a public-service tool, it will develop and expand as RTE intends to make transparency and access to electricity data a performance driver supporting the community. It is also designing a “customer” platform including a section that is open to the public.

Together with the gas transmission system GRTgaz, which also gathers a substantial amount of data in real time, RTE has created a common platform called Open Data Réseaux Énergies.GRTgaz and RTE have intensified their cooperation by posting data on this common platform, focusing on subjects like “power generation”, “consumption” and “geographical areas and regions”. By posting these initial sets of data, both companies are making strides in their efforts to be transparent and to educate citizens, regional authorities and economic players, whilst at the same time providing material for the establishment and review of energy policies.

BECOMING AN OPEN DATA STAKEHOLDER

One of the commitments to which RTE signed up as part of its company

project was to make electricity-system data accessible to everyone, giving citizens the opportunity to control their consumption and play an active role in the energy transition. With this in mind, RTE launched its “open data” initiative in 2016. This also gives scientists, designers and start-up companies an opportunity to come up with innovative solutions.

Through this initiative, GRTgaz and RTE are seeking to provide high-quality, continuous and comprehensive data. In addition to this platform, numerous items of “real-time” data are easily accessible on the GRTgaz+ and éCO2mix mobile applications.

Open data cannot exist without data. In order to gather increasing amounts of data about the electricity system, RTE has established a partnership with four start-up companies that won prizes at its Smart Grid competition: Hikob, Visual Concept, Senseor and Intesens.These start-ups have begun installing their sensors on high and ultra-high voltage grids in order to gather more data and improve the way data is processed before being converted into information that RTE can use.New-generation sensors developed by the Intesens start-up company, for instance, were installed on the grid in 2016 to continuously monitor vibrations, electrical current, cable slope and cable temperature. This data enables RTE to operate the grid to its full capacity by allowing more through-put. This involves transforming pylons into smart devices connected to their environment.

By providing innovative start-ups with opportunities for piloting and rolling out their products in conjunction with the SmartGrids France cluster and the Pacte PME association, RTE is seeking to fulfil a three-fold objective: gathering data on grid operations in order to develop value-added innovative ideas, support French start-ups specialising in SmartGrids and ultimately come up with marketable industrial solutions.


000

In 2016, RTE expanded its partnership with Ouest Normandie Énergies Marines for the development of marine renewables.This regional development initiative encompasses a number of projects: the connection of three offshore wind farms (at Courseulles-sur-Mer, Fécamp and Dieppe-Le Tréport), each with a capacity of 500 MW; the future marine-current turbines at Raz Blanchard, which could amount to hundreds of megawatts of generation capacity by year 2025, as well as the planned connection between France, Alderney and England.Contributing to the development of marine renewables requires intensive dialogue with elected representatives, socio-economic representatives, sea users (professional and recreational) and non-profi t environmental organisations. RTE is already engaging in active dialogue as part of its plan to establish a 63,000-V underwater and underground connection for the fl oating wind turbines at Groix & Belle-Île, thus helping to ensure security of supply for Brittany.

In December 2016, RTE signed a public participation agreement, which is fully aligned with its societal and environmental responsibility commitment to dialogue with local residents.Public participation was remarkable when it came to large-scale projects like 2Loires, Haute-Durance, Lonny-Seuil-Vesle and Avelin-Gavrelle. In 2016, RTE ran a door-to-door campaign in response to legitimate questions from local residents about the construction of a switchyard in the county of Sud-Aveyron, in order to provide the area with a secure supply of electrical power.

777hectares of biodiversity-friendly land surface were developed underneath RTE power lines.

THE RTE FOUNDATION

In 2016, the RTE Foundation supported 12 new projects amount-

ing to a total of more than 340,000 Euros.

The RTE Foundation sponsors economic and social development initiatives in rural areas.

SUPPORTING PARTNERSHIPS

RTE is jointly developing proactive solutions with all stakeholders.

In September 2016, the company issued its new environmental policy reasserting its commitment to continuous environmental preservation in the form of lasting partnerships.

On 9 November 2016 after four years of fruitful cooperation, RTE and the French nature conservancy (Fédération des Conservatoires d’Espaces Naturels) reaffi rmed their determination to collaborate in support of biodiversity.Environment, maintenance, design and engineering, sustainable development and R&D: RTE personnel from the different specialist groups involved in this partnership are working hand in hand with biodiversity specialists belonging to the different nature conservancies.

RTE has also renewed its partnership with the Ligue de Protection des Oiseaux (LPO) for another 3 years. This partnership refl ects RTE’s determination to minimise the effects of its activities on the environment by contributing to the preservation of biodiversity. LPO and RTE share a common concern: bird migration. RTE is convinced that the effi cacy of power-line marking to avoid bird collisions could be improved by a better understanding of bird migration habits. Furthermore, a renewed focus on the relationship between bird life and power-supply continuity would help to mitigate the risk of short circuits disrupting the supply of power to our customers.

THE EMODI PROJECT

In order to support the expansion of marine renewables, effi cient underwater cables need to be developed. That is the aim of the EMODI project, the initial results of which were presented at the International Symposium on Electromagnetic Compatibility held at Rennes in July 2016.

RTE and a number of partners are involved in the project: the Atomic Energy Commission, the cable manufacturer Nexans, the French Institute of Science and Technology for Transport, Development and Networks, the Nantes Atlantique Research Institute for Electrical Energy and the École Centrale de Nantes (Engineering College).

HYDRO-QUEBEC PARTNERSHIP

A forward-looking partnership: In 2016, RTE and its Canadian counterpart Hydro-Québec signed a memorandum of understanding to foster the exchange of expertise.

In accordance with this agreement, the partners are exploring ways of setting up joint entities to market innovative solutions and share their respective know-how.

Life below water

Partnerships for the goals

RTE 32

BEING RECEPTIVE TO NEW WORKING METHODS

Being receptive to new working methods puts us ahead of the game. In 2016,

RTE continued to innovate in order to harness energies and gain in agility.

In order to foster the emergence of new ideas by exploring the potential of digital technologies, RTE launched its range of “studios” in 2016: Open Studio, Explore Studio and Dev Studio.Open Studio enables RTE to directly interact with start-up companies that are highly specialised in major transformations (self-generation or self-consumption) in order to better understand the potential impact of these transformations on the grid.Explore Studio is a work space where personnel from different RTE entities will be engaging in exploratory projects based on collaborative design and iteration in order to come up with collective solutions to tomorrow’s challenges by thinking out of the box.A real incubator of digital ideas developed by RTE employees, Dev Studio offers interested personnel access to software development, thus making digital technology available to all.

RTE’s company project was jointly developed by members of the workforce using an unprecedented participative system that harnesses collective intelligence.Step 1: In-depth interviews were conducted with 80 employees in order to reach a diagnosis and provide material for the discussions of the Executive Committee. The on-line collaborative tool – Stormz – was then provided to RTE’s 8,500 employees over the period of May to June 2016, during which everyone was able to contribute. With over 4,000 participants enrolled in 19 workshops, RTE employees were actively involved and came up with nearly 3000 ideas for the company’s future.

RTE is an active contributor to local economic growth by offering job opportunities across the region by hiring personnel as well as by hosting placements and internships. In 2016, 433 employees were hired on permanent contract, nearly 50% of whom were less than 25 years old. In 2016, RTE also hosted 459 placements and 200 internships for a period of more than 2 months.

DRONES

In 2016, RTE teams piloted the use of drones for the maintenance of grid infrastructures.

Drones are being used to capture high-precision visual data in order to monitor the condition of overhead structures and perform maintenance work more effectively by using computers to identify damaged structures.

000

BUSINESS AND SUSTAINABLE DEVELOPMENT REPORT 2016

In 2016 and for the second year running, RTE conducted a materiality assessment. This exercise, which is essential to any societal and environmental responsibility initiative, prioritises factors that positively or negatively infl uence the company’s business activities. This assessment has corroborated the priorities and ambitions of RTE’s new company project, and has already resulted in actions designed to improve RTE’s performance and/or perception when it comes to high-priority issues (fl exible consumption and demand control services, accommodation capacity of renewable energy, etc.).

RTE has demanded that all its contractors use the MALT APE earthing system when working on its facilities.This decision was taken after a contract worker received an electric shock while removing an earth terminal from an RTE substation.

921new J.nov ideas were submitted in 2016.

J.nov

RTE’s in-house J.nov initiative was awarded the gold trophy for participative innovation from the Innov’acteurs non-profi t organisation.

With J.nov, all RTE employees can suggest novel solutions to resolve concrete issues.

BIPPER

Launched by RTE BIPPER in November 2016, this innovative industrial safety application is being shared with all contractors working on RTE projects.

It enables workers to report an accident or hazardous condition in real time, as well as to read about, comment on and share good practices.

Quality education

Peace, justice and strong institutions

33

1 terrasse Bellini TSA 4100092919 La Défense Cedexwww.rte-france.com

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