A total of six French nuclear power units with combined capacity of 6.6GW are expected to be connected back up to the country’s grid this week following maintenance, according to system operator RTE.
If all the plants return as scheduled to the grid – which given past experiences, however, is unlikely – nuclear availability in France will improve from 70% on Monday to almost 76% by Sunday, data accessed on Monday afternoon indicated.
Patterns of trade on Monday pointed to an increase in supply confidence among market participants, for three reasons:
• ICIS recorded over-the-counter transactions on individual weekly baseload products as far ahead as week 43, which was week+5. It is very unusual for the French market to trade so far ahead on individual weeks, meaning participants were very keen to achieve the price that was available while they still could.
• More tellingly, of all the transactions ICIS recorded after 12:40pm Paris time on week 40 out to week 43 inclusive, 25 of 26 were bids hit. This means the seller was the aggressor, choosing to transact at the bid price that was already on screen.
• Prior to 12:40pm, most transactions on these products had been offers lifted.
This means that, after midday, there was a stark shift in sentiment on the near-curve with more aggression on the sell side than the buy side.
This pattern could reflect an unwinding of long positions taken on the October monthly product. If some traders thought the premium on October to be overdone given the easing of the nuclear issue, but selling the entire month was in itself too risky, they may opt to sell it back a week at a time to unwind length on October.
The timing of the return of the plants will be pivotal for wholesale power prices on the French spot and forward market – and more broadly for European power prices – due to France’s position as a large exporter of electricity to neighbouring markets in the region.
Last month, news of an audit requiring EDF to review nuclear components in its fleet and report to nuclear watchdog ASN pushed up prices of contracts on the near curve. As a result price spikes on the French power near-curve have been recorded, driven by fears that nuclear units in France could potentially stay offline for longer than their scheduled maintenance periods.
This has filtered through to increased gas prices due to the potential for extra combined-cycle gas turbine (CCGT) demand, but not to the same extent as power has risen in value, resulting in increasingly positive profit margins, known as spark spreads, for CCGTs in France and Germany.
In light of recent history, the return of the units is most likely to be subject to change, as repeated updates to EDF’s nuclear availability so far this year have already suggested.
This is the main reason why traders have priced in lower nuclear availability than indicated by EDF, both in the short- and the longer-term.
But, despite the doubts, the nuclear fleet has already passed its first test. Over the weekend of 16-17 September, EDF brought back online the 1.5GW Civaux 1 and the 890MW Dampierre 1 units on schedule as planned. This pulled nuclear availability up to above 70% from 68% on Friday last week.
On Monday, prompt contracts out as far as the front week did lose value, indicating a potential easing of supply-side concerns in the minds of market participants.
The next test will come on Tuesday, with the expected return of the 890MW Dampierre 2 unit in the afternoon. Then on Wednesday, the 905MW Chinon 1 – offline since 10 June – should come back into operation.
If this schedule plays out as planned, participants may be tempted to sell further into the near curve, as it could be taken as evidence that French nuclear is not going to suffer maintenance extensions this winter as had been feared when the audit of components news first broke.
And another four...
By the end of Thursday, four more reactors are then due to return: The 1.3GW Cattenom 4, the 1.3GW Belleville 1, the 880MW Fessenheim 1 and the 1.3GW Golfech 1. Adding these to the grid should drive up availability from 73% on Thursday morning to 81% on Friday morning before dropping to 76% again on Saturday as three other reactors go offline for maintenance (see table at bottom of story).
But low wind power in Germany and France should keep power prices higher this week. On Monday, the French Wednesday Baseload contract was last assessed at the over-the-counter market at €41.50/MWh, with day-ahead for Tuesday delivery at €44.00/MWh.
For the week ahead, Week 39 Baseload was last assessed at €39.125/MWh on Monday morning, suggesting there was some downward momentum priced in over the coming fortnight, although this would be influenced by factors such as forecasts of warmer weather and improved wind output as well as by nuclear. The week-ahead product would also include the weekend+2 as well, which would dampen its value relative to a working day. firstname.lastname@example.org