France has responded to soaring power prices as the energy crisis deepens. France has been hit by a combination of shutting down nuclear power sources at the same time as Russia restricts natural gas supplies. The French finance minister Bruno Le Maire in a speech said France needs to prepare for a hard winter with less gas available and in need to think about rationing of gas to industry. The tone is very much in the panicky and threatening tone which has become all too familiar after the Covid lockdown and the Russian invasion of Ukraine.
France’s finance minister Bruno Le Maire highlights
- We need to prepare for hard winter with less gas available and in need to think about rationing of gas to industry
- energy discounts to consumers are better than windfall taxes on energy companies
- in insurance companies should limit increase of insurance premiums
- if Russian gas supplies were to be cut that could jeopardize economic growth
- reform of pensions and unemployment benefits remain priority for coming months
- full employment in France by 2027 remains key government target
- France studying options for better energy interconnection between Spain and France
On the Economy:
- French growth is solid, 2.5% for 2022 remains achievable
- full employment in France by 2027 remains key government target
Nuclear Power
The surge in prices is being driven by Electricite de France SA’s announcement that more of its reactors will take longer to come back online after halts. The outages affect plants with a combined capacity of 8,380 megawatts, almost 14% of France’s total nuclear capacity. Power futures soared 15% to 900 euros per megawatt-hour last week more than 10 times the price at this time last year.
Typically, France produces around 400 terawatt-hours (or 400,000 GWh) of nuclear electricity and exports about 10% of it in warmer months. But during winter consumption peaks, France imports power from its Neighbours, particularly Germany.
This year, EDF forecasts French nuclear production at 280-300 terawatt-hours, the lowest since 1993. France has imported power from the likes of Germany and Belgium during the summer, when it would usually be exporting it.
State-run Electricite de France SA is facing full nationalization as part of the government’s plans to get the country’s power system back on its feet. France normally exports power to its neighbors like the UK and Germany for most of the year, but the reverse is expected in 2022, and it may need to import electricity during long periods this winter if its neighbors have the capacity to provide it. In France, six reactor outages have been extended since last Wednesday afternoon, as well as a new one announced at the Paluel 4 reactor for four days. Some of the shutdowns are just for a few days, while others have been extended by as many as two months.
Baseload power for November gained 9.2% to 1,660 euros, with peak-load energy, for periods of high demand trading at 2,881 euros. German power prices for next year soared as much as 23% to an all-time high of 792 euros a megawatt-hour.
Day-ahead prices also rose to records across Europe, including in Germany, France and the UK. The highest was in Italy, where electricity for Friday jumped 17% to a record 718.71 euros per megawatt hour, according to data from Gestore dei Mercati Energetici SpA.
Russia
Russia’s state-controlled energy company Gazprom further reduced gas deliveries to French company Engie.
Gazprom informed Engie of a reduction in gas deliveries, starting Tuesday, because of “a disagreement between the parties on the application of several contracts,” according to the statement from the French energy company. Deliveries for Engie from Gazprom have significantly decreased since Russia invaded Ukraine on Feb. 24, with recent monthly supply of 1.5 TWh, which compares to Engie’s total annual supplies in Europe above 400 TWh, the statement said.
via Bloomberg
From The TradersCommunity News Desk