Why is the French Q1 2024 power price twice as much as it should be from a fundamental perspective?
At the end of last year, the French power market witnessed a rapid drop in the Q1 23 price as the delivery period approached, certainly driven by the reduction of the natural gas price, but also by the prompt disappearance of a significant risk premium, which had been in turn mainly boosted by uncertainties over nuclear generation and fear of potential cold spells.
In this analysis, we adopt a ‘theoretical price-setting plant’ approach to investigate the extent to which future French electricity prices are impacted by risk premium.
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