FRENCH POWER MONTHLY: Winter risks may keep October prompt prices supported

LONDON (ICIS)–The French October is likely to remain supported into delivery as demand rises with colder temperatures and uncertainty remains over nuclear availability.

But market sources suggest France could rely less on imports and could even export to the UK depending on temperatures and should nuclear availability rise as scheduled.

EDF’s nuclear schedule suggests that French nuclear plants are set to start returning, however it is uncertain on whether reactors will return on time. This could keep risk premium on prompt prices through October delivery.

Temperatures during October are forecast to fluctuate above and below the seasonal norm, but mostly remain below the norm by 1-3°C.

During cooler weeks, electricity demand for heating could lift which could have a knock-on effect on prompt prices if margins tighten.

NUCLEAR SCHEDULE

French nuclear availability in October is expected to average 36GW, which is 5.2GW below the 2017-2021 average, according to the French national grid operator RTE.

The current nuclear schedule for October indicates availability will average 9.4GW higher than during September, which shows a significant increase in nuclear availability amid temperatures that are likely to start dropping through October.

Approximately 11 nuclear plants are set to return in October, with three of them being reactors impacted by stress corrosion, according to the French nuclear availability schedule.

“[France] should export some electricity during the night if the nuclear plants come back normally,” a trader told ICIS.

However, RTE has stated that there is a possibility of six stress corrosion reactors not returning through most of the winter, which could mean some of the expected plants set to return in October could be delayed.

OCTOBER DELIVERY

Cooler temperatures through October will trigger a lift in demand for power, which could support spot prices when temperatures dip below the seasonal average.

It is likely that French prices will remain at a premium to Germany and UK with demand rising and nuclear uncertainty continuing.

On 28 September, the French Week 41 ’22 baseload was priced at €418/MWh which is €50.75/MWh higher than Germany and €56.13/MWh higher than the UK, according to ICIS price assessments.

“I think [prices] are close to reality, it will depend on the nuclear power plants, which should come back soon, and the weather,” the trader added.

FRENCH NET IMPORTS

So far in September, French net imports have averaged 4.9GW, which is higher than the 2019-2021 September average of 4.5GW of net exports, according to ENTSO-E.

Typically, France would export electricity to neighbouring countries in previous years, however the current high level of imports reveals the amount of strain France is facing prior to winter.

With winter risks set to remain, France will be reliant on net imports to compensate for any low levels of power generation whether it be through nuclear, hydropower and wind.