Southern French CCGTs switch off despite high power prices

28 September 2016 05:48 Source:ICIS

Gas-fired power plants in southern France have repeatedly been forced to turn down production during off-peak hours throughout September in spite of inflated baseload power prices and a swathe of nuclear outages.

Many plants have been forced to adopt the running pattern, known as two-shifting, because of relatively low profit margins. This has been driven by maintenance on some key natural gas transmission infrastructure which has inflated prices in the southern TRS bidding zone relative to the PEG Nord region, preventing combined-cycle gas turbines (CCGTs) in the south from fully cashing in on high power prices to the extent that their northern counterparts have been able to.

And looking ahead, French electricity supply is expected to remain strained with output from nuclear incumbent EDF’s fleet of plants being hindered by a need to put in place additional technical controls on steam generators (see EDEM 22 September 2016). In addition nuclear outages in neighbouring Belgium, where three of seven units remain offline, are adding to the ongoing crunch.

Yet according to forward curves, French gas prices across the northern and southern bidding zones are still not expected to couple during October, which means another tough month ahead is in store for southern French CCGTs.

In fact it may be the following month until some relief comes, with November ‘16 trading in the TRS zone most recently at a €0.85/MWh premium to PEG Nord early in the afternoon on Tuesday. This more standard spread compares with a €2.363/MWh premium on TRS October ‘16, according to Monday’s closing assessments.

“The spread is narrowing over the coming months, so a more uniform behaviour could be expected for the rest of the winter,” one French energy analyst said of the unfolding picture post-October.

Spark disparity

CCGTs in the French TRS zone have been shackled by poor economics throughout September. ICIS calculations using TRS and PEG Nord day-ahead prices, as well as the equivalent French power baseload and peak figures, show the clean spark spread even at peak times in the TRS was below the Peg Nord baseload figure.

This has forced TRS-based CCGTs to scale back power production, particularly between mid-night and 06:00. Generation volume in the early hours has typically been around 15% of the intra-day peak.

While this might appear standard practice for marginal power plants, French power grid operator RTE’s data shows that PEG Nord CCGT’s have largely remained immune to this two-shift pattern, with combined early hours production typically only falling to around 60% of peak output.


For October delivery, the pattern should begin to subside but should still be evident to some extent. ICIS front-month spark calculations point to a premium on peak profit margins for TRS CCGTs relative to PEG Nord baseload spreads, but a like-for-like comparison still puts PEG Nord plants in a considerably more profitable place.


LNG has also been cited as a further driver. The high TRS price has boosted send-out into the zone by 15% from an average of 13 million cubic metres (mcm) per day in August to 15mcm/day in September, including terminal projections to the end of this month.

But with a steady increase in the ICIS NW Europe spot LNG index from August into September, LNG flows have proven insufficient to pull down the prompt gas price and increase the CCGT profit margin to a level that would drive off-peak generation.

By Jamie Stewart