ICIS POWER FORESIGHT: European nuclear generation to continue at historic lows in April as Germany completes phase-out

In this free-to-read update, ICIS analysts Luca Urbanucci and Matthew Jones review what happened around nuclear generation in Europe in March 2023 and provide an outlook on what to expect going forward.

European nuclear generation in April is projected to remain 2% below 2022 and 18% lower than the 2015-2021 averages, forecasts from the soon to be launched ICIS Power Foresight model show. Germany is set to complete its nuclear phase-out this month, while strikes in France continue to threaten availability and delay maintenance schedules.

The French Q4 2023 and Q1 2024 contracts have risen by 56% and 76% respectively since news of a new reactor crack was revealed on 7 March, leading to the French Nuclear Safety Authority (ASN) asking EDF to revise its  inspections strategy. Having rejected the utilities initial revised strategy, the market awaits news of the new plan in April.

This update reviews what happened around nuclear generation in Europe in March 2023 and provides an outlook on what to expect going forward.

Review

Nuclear energy recorded a generation of 56 TWh in Europe in March, which corresponds to an average of 76 GW (compared to 83 GW in February and 85 GW in January).

• Continuing the same trend as in the first two months of the year, nuclear generation in March recorded a 7% and a 22% decrease year-on-year compared to 2022 and the 2015-2021 average, respectively.

France

• France, which accounted for about 43% of the whole European nuclear generation in 2022, hit a historic low of just 26 TWh in March (35 GW on average), even worse than the 2022 performance (27 TWh in March).
  • This was mainly due to the ongoing strike action that has largely impacted power production and curbed nuclear availability as well.
  • We estimate that the strikes in March resulted in a reduced nuclear generation by about 3TWh.
• At the end of February, EDF announced that a new stress-corrosion crack located at Penly-1 reactor had been detected. Concerns surrounding this news (followed by the discovery of further cracks at Penly-2 and Cattenom-3 reactors) stem from the fact that the crack was found in a part of the reactor that was considered immune to stress corrosion.
  • Subsequently, the French Nuclear Safety Authority (ASN) has asked EDF to revise its control and maintenance strategy to take into account these new findings.
  • At present, EDF has not revised down the expected annual generation, and news on the updated maintenance plan is still awaited.
  • Yet, concerns that a situation similar to that of 2022 may be repeated have already significantly impacted forward contracts, with the Q1 2024 contract closing above €400/MWh on the first three days in April.

Rest of Europe

• As for the rest of Europe, the nuclear generation in March was about 31 TWh (corresponding to an average of 42 GW), which is 9% and 19% less than 2022 and 2015-2021 average generation, respectively.
• Among the countries with the largest contribution in terms of generation, Spain and Switzerland are in line with historical averages, while Finland has started to increase its generation (+29% vs historical average) as a result of the ongoing tests for the long-awaited start-up of the Olkiluoto-3 plant.
• On the other hand, most countries have seen reduced nuclear output compared to previous years.
  • Sweden is 30% below the 2015-2021 average, because of several outages mainly affecting Ringhals-4 and Oskarshamn-3 reactors.
  • As a result of the reduced capacity (5.9 GW compared to 7.3 GW and 8.9 GW in 2022 and 2021, respectively), the UK recorded a 33% decrease against the historical average.
    • Moreover, Sizewell B (1.2 GW) has been offline since mid-February for a refuelling and maintenance programme and is expected to come back online at the end of April.
  • Belgian generation dropped by 25% compared to March 2022, due to the closure of Doel-3 and Tihange-2 in the last months, with the overall capacity cut to 2.9 GW from 4.9 GW.
  • Likewise, the phase-out plan reduced German generation in March by 28% and 66% compared to the 2022 and 2015-2021 average, respectively.

Outlook

France

• In April, the availability is expected to average around 36 GW, which is slightly less compared to what was realised in March (37 GW).
  • The resulting generation is therefore projected to be about 24 TWh in April, according to ICIS Power Foresight projections (corresponding to an average generation of about 33.5 GW).
  • This would be an improvement compared to 2022, when in April corrosion problems emerged dramatically and the generation was just below 22 TWh.
• Yet, should the strikes targeting nuclear plants continue, the April generation, as well as the maintenance schedule for the following months, could be affected as already observed in the past weeks.
• Moreover, a substantial revision in the EDF’s control and maintenance programme would have an even greater impact on the entire annual output. If news of the new plan emerges, this could be significantly bullish or bearish depending on the details. However, given how much risk premium has already built up on Winter contracts, we believe that the announcement of a new plan has more downside than upside risk.

Rest of Europe

• In the rest of Europe, nuclear generation is expected to fall to 28.5 TWh in April, according to ICIS Power Foresight projections, which will continue to be significantly below both 2022 and the 2015-2021 average.
• This will be driven in large part by Germany, which plans to complete its nuclear phase-out by 15 April, with the shut-down of the 3 remaining plants (totalling about 4 GW of capacity). The monthly generation is expected to drop to just 1 TWh.
• However, this will be partially offset by developments in the Nordics:
  • In April, Swedish generation is expected to improve and reach around 4.5 TWh (in line with the 2022 figure), as only minor outages are planned.
  • The new Finnish plant (Olkiluoto-3, with a nominal capacity of 1.6 GW) is set to enter full operation from 17 April, with the monthly generation then projected to reach 3 TWh.
• No major changes are expected in the other countries, with overall nuclear availability slightly decreasing due to maintenance outages, scheduled as usual in the spring months when demand is lowest.