French power keeps rising depsite IRSN nuclear comments

Author: Rebecca Gualandi

2019/09/11

LONDON (ICIS)--France’s nuclear technical safety institute IRSN has confirmed that the welding problems EDF warned about on Tuesday are likely to affect mainly reactors which have had steam generators replaced since 2008, notably its older 900MW reactors.

IRSN also said it is too early to tell whether the welding problems could force the French utility to close reactors or how long further inspections would take.

EDF said in a press release on Tuesday that its reactor-building unit Framatome informed it of defective components at an undisclosed number of French nuclear reactors.

The market spiked in response to the news during Tuesday’s session. The front quarter reached €57.88/MWh, recording its largest day-on-day difference since November 2016, when the French nuclear regulator ASN ordered EDF to close up to a third of its 58 nuclear reactors for weeks.

IRSN’s comments briefly shunted the French power market to the downside on Wednesday.

The French Q4 ’19 Baseload traded at a peak of €64.75/MWh before 09:30 Paris time and then fell to €57/MWh in the early afternoon.

The comments were not enough to completely ease power traders’ fears as the contract climbed back up to €61.45/MWh by the time the market closed on Wednesday, registering another session-on-session gain.

One trader at a European utility said that the market reacted very violently likely because traders are hyper-aware of what took place in 2016 following a similar announcement by the same reactor-building subsidiary EDF Areva, which has now been re-named Framatome.

The trader said that in 2016 not everyone fully understood the gravity of the situation and sold too early, likely following algorithmic or technical indicators, and then found themselves in difficult situations when nuclear availability was drastically reduced.

Another trader said that it was likely that the current level of premium is unsustainable and that contracts would stop gaining as much in coming days.

Announcements also supported natural gas prices on Tuesday which helped to further lift French power products. The Dutch economic ministry will cap production from the country’s giant Groningen gas field more stringently than anticipated and a court denied Gazprom access to part of the OPAL gas pipeline, restricting Russian supply to Europe.

Market participants will be waiting for further information on whether reactors will have to be taken offline for inspections and how many if so.

The 34 nuclear reactors in France with a capacity of 900MW could be impacted.

EDF said that it will provide more information in the coming days.