Electricity prices in France top €1,000/MWh as more nuclear reactors close for winter

France’s wholesale power prices for mid-winter jumped above €1,000/MWh (1,540 A/MWh) after the operator of the world’s largest nuclear fleet revealed more problems and more breakdowns in its reactors.

The price spike for January delivery came after utility EdF cut planned output for the fourth time this year, on this occasion due to extended shutdowns at four reactors and maintenance delays at others. caused by the waves of strikes that have affected the country this year. autumn.

It also dramatically reversed weeks of falling spot and futures prices as gas stocks improved and the weather remained wild. But as analysts noted at the height of the summer, nuclear issues pose just as big of a threat to the EU grid as gas issues.

Energy analyst Gerard Reid noted in a LinkedIn post that half of France’s 56 reactors are out of service due to emergency scheduled or emergency maintenance measures.

“For months….EdF has said everything will be fine this winter, but on Friday the company announced that four more reactors that were due to come back online in the coming weeks will be delayed until early next year” , Reid wrote, noting that this was the fourth drop in production in 2022.

“The implications are huge,” Reid noted. “For every one degree drop in temperature, France needs an additional nuclear power plant to provide the energy needed to produce heat throughout the country.

“This means that on a cold day in January, France needs about 45 GW of nuclear power. Yesterday there was only 25 GW online.

The news is important because the French nuclear fleet is often presented as the “backbone” of the European network, especially since the impact of the Russian embargo on gas and soaring prices have raised fears of shortages of electricity throughout Europe.

Many European countries now have their gas storage facilities full and are confident they can get through the winter unless there is a major cold snap.

But France’s shift from a major exporter of nuclear energy it had no use for to a major importer of electricity from other countries threatens to change the equation. Bloomberg’s Javier Blas says France now faces a serious risk of blackouts this winter.

“The situation changed dramatically this year, when France went from one of Europe’s largest electricity exporters to a net importer due to problems with its reactors,” Bloomberg wrote recently.

“The outages have worried officials that France and the wider region could run out of power in winter, when Europe’s electricity demand peaks.”

Oil Price writes that news of the nuclear problems sent French electricity contracts skyrocketing, above €1,000/MWh at one point for January delivery. It also impacted Dutch gas futures, the European benchmark, although those prices fell on hopes of a continued warm spell across Europe.

In France, the issue of power supply dominated political debate and nightly newscasts, down to constant questions about how television personalities wear warm clothes to reduce the need for heating.

“The only question I have is whether there will be power outages or orderly shutdowns of industry, as I don’t think EDF will commission the 20 GW of power plants needed to by the end of this year,” Reid wrote.

“The alternative, with your head in the sand, is to sit back and hope that the unusually warm autumn we are currently experiencing across Europe continues into winter.”

Source: Rystad Energy.

Update: Rystad Energy analysts said in a note released on Tuesday (European time) that the French January contract was still trading at around €920 per MWh, almost three times the price in Germany (€360 per MWh). ).

“Market participants are pricing a risk premium on supply shortages in France,” Rystad noted, adding that real and future power futures in France have been trading for some time at a significant premium per compared to prices in Germany.

“EDF’s announcement also increases the risk of supply shortages for the coming winter, with availability at historically low levels for this time of year, at around 50% availability.”

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