French nuclear woes drive up electricity prices in Europe

A general view shows France’s oldest Electricite de France (EDF) nuclear power station, outside the French village of Fessenheim, near Colmar, September 5, 2012. REUTERS/Vincent Kessler

Join now for FREE unlimited access to Reuters.com

Register

  • The electricity market is tight due to French nuclear problems, heat
  • Related gas, coal and carbon prices are also soaring
  • Skyrocketing energy prices could scare off industry

PARIS/FRANKFURT, Aug 24 (Reuters) – Electricity prices in Europe hit new records as France grapples with a drop in nuclear output, adding further pressure to wholesale energy markets already grappling with a drastically reduced Russian gas supply.

Technical problems have hampered France’s nuclear reactors as well as summer maintenance and drought has dampened hydroelectric generation, another of its main sources of power generation.

Electricity from neighboring countries is needed to help France manage its nuclear shortage. With gas making up the majority of the shortfall, the additional demand is pushing prices up again.

Join now for FREE unlimited access to Reuters.com

Register

“In France, only half of the reactors are working,” said German Secretary of State at the Ministry of the Economy, Patrick Graichen.

“France buys elsewhere even if electricity is expensive,” he said, adding that Germany and Italy, a big gas consumer, send electricity to France.

France and Germany represent two-thirds of Western Europe’s electricity consumption within an interconnected market.

Germany’s benchmark baseload electricity price for the previous year set a record high of 709 euros ($708.01) per megawatt-hour (MWh) on Monday and has gained 50% in the past fortnight.

The Dutch first-month gas contract set a record high of 292.5 euros on Monday and is up nearly 40% from two weeks ago.

Soaring electricity prices affect gas, which is burned to generate electricity in competition with coal, and increase the cost of CO2 emission permits.

“Gas is still needed (for power), and to an increased degree as well, because hydropower and nuclear power are so low,” said Rystad analyst Fabian Ronningen.

European coal futures for 2023 hit a record high this week at $332 a tonne and carbon prices also hit all-time highs, not far off 100 euros a tonne.

Power had already been rising since last month after Russia’s Gazprom (GAZP.MM) failed to fully restart the Nord Stream 1 gas pipeline after maintenance, citing problems with a turbine and raising the prospect that power plants will suffer serious shortages.

Then Gazprom said last Friday that flows would again be halted for three days from August 31. read more

“The market is pricing in the possibility that Nord Stream 1 will not restart and stay at zero,” Graichen said.

DEMAND DESTRUCTION

Commerzbank said Germany’s annual one-year contract had doubled in four weeks and at Monday’s level of 700 euros it was 14 times the seasonal average for the past five years.

“This further increases the pressure on energy-intensive industry, which means that further closures of production facilities – for example aluminum and zinc – are likely,” he said.

Foundries depend on cheap electricity.

Renewables are of no help, as hot weather has dampened wind and hydro generation and contributed to what analysts call a residual load deficit.

Residual load is the remaining electricity demand for conventional power plants, such as gas and coal-fired plants, after accounting for renewable energy generation.

However, there are two factors to help increase the power supply.

After some rain, the measuring point of the German Kaub Rhine river, which shows what can be transported on raw material barges to the middle and upper Rhine, was at 118 centimeters (cm) on Wednesday, against a low this summer of 32 cm.

When levels drop below 30 cm, it becomes uneconomical for many ships to continue their journey.

Additionally, in response to gas scarcity, Germany has a second coal-fired plant that was originally inactive and was to join the power grid, Uniper’s (UN01.DE) 875 megawatt Heyden 4 (MW).

Due to return from August 29 to April 30, 2023, Heyden follows the 690 MW Mehrum power station, which restarted operations on August 2. read more

($1 = 1.0014 euros)

Join now for FREE unlimited access to Reuters.com

Register

Reporting by Forrest Crellin and Vera Eckert; edited by Veronica Brown, Nina Chestney and Elaine Hardcastle

Our standards: The Thomson Reuters Trust Principles.

Vera Eckert

Thomson Reuters

Senior Electricity Correspondent for Germany with over 30 years of experience and focused on deregulated energy markets for electricity and gas, business, grids, exchanges, renewables, politics, storage, transport of the future and hydrogen. A German native who studied and worked in the United States and Great Britain.

Comments are closed.