Extreme summer heat in France, which drove a sharp spike on contracts for delivery up to two weeks ahead at the country’s electricity market on Wednesday, continued to hold Day-ahead Baseload close to €50.00/MWh on Thursday.
But indications that the worst heat might be coming to an end considerably eased some upwards pressure on the week-ahead product, ICIS closing assessments showed.
However, dry and hot weather is expected to last at least another two weeks and market participants remained on alert to the risk of nuclear power outages.
Week 28 ’15 Baseload last traded at €50.50/MWh on Thursday according to ICIS transaction data. Yet this marked a large drop from the previous day when it had rallied to gain more than €7.00/MWh day-on-day to close at €53.375/MWh.
Elsewhere, the Dutch front week and front month followed suit, albeit to a lesser extent, as both products were cautiously sold down, taking a lead from France which shares a close link with the Netherlands.
“There was a lot of short covering last session,” a utility-based trader said on Thursday morning. “It has been a long time since we last had high summer prices so a lot of traders have been late to cover positions,” he added.
Due to high nuclear availability and cool temperatures, Day-ahead Baseload had never pushed above €32.75/MWh throughout July 2014 and plummeted as low as €18.00/MWh. By contrast, the contract was last assessed at €47.55/MWh on Wednesday, before climbing on Thursday.
Temperatures are forecast to reach highs of 39°C in the south of France on Friday, according to meteorologist Meteo France, and highs of 37°C and 38°C reappear throughout the forecast for the week ahead. “The heat appears to persist,” the meteorologist said of week 29, opening up the possibility that above-average temperatures will last at least three weeks.
‘The system looks very tight...’
Peaking at around 7°C above the norm this weekend, temperatures will remain at 5-6°C above the norm on Monday and Tuesday, but drop to 2-3°C above the norm for the remainder of the week, according to the latest forecast published by transmission system operator RTE.
“The system looks very tight for Monday and Tuesday, but it doesn’t look super-hot for the rest of the week,” the trader said.
“It seems like we will get above-average temperatures for the next two weeks. It’s a bit early to say but if no rain is coming we could have an issue with river temperatures and nuclear generation,” he said.
Short-term capacity reductions have already occurred in the case of the reactors Cattenom 1, St Alban 2, Gravelines 6, and Paluel 3 on 1-2 July, while forced unavailability at Bugey 3 is still ongoing.
Nuclear incumbent EDF declined to comment on the probability of reduced atomic generation if the heat wave lasts up to three weeks.
“When we made the forecast analysis of the balance between power consumption and generation for the summer, we took into account a situation of a heatwave lasting all summer, with temperatures 7°C above regular temperatures,” an RTE spokeswoman said. Next week’s conditions should be more favourable at 5°C above regular temperatures,” she said.
Power cuts earlier in the week on Tuesday were caused by problems with metering transformers designed to measure intensity and voltage, the spokeswoman said.
“Due to the heat wave, and more especially to the change of temperature in between the end of the afternoon and the beginning of the night, those metering transformers encountered difficulties.
“We already had identified this issue, and we started two years ago to replace some of these. We identified eleven thousand flawed metering transformers all over France that needed to be changed,” she said. Seven thousand of them have already been changed,” she added. email@example.com