French electricity reaches a record of 930 euros on EDF production - Montel - November 4, 2022

The article below was published on the Montel News website on Friday November 4, 2022

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The French electricity contract for the first month reached a record level of 930 EUR/MWh on Friday, as the public service EDF extended reactor shutdowns by three and a half months and reduced its nuclear production target for 2022 by 5%. The December contract reached an intraday high of 930 EUR/MWh, the highest for a previous month on a sliding basis, with the latest rise from 49.78 EUR to 870 EUR/MWh.

The month of January, for its part, was last seen at 1,125.50 EUR/MWh, up by 76.30 EUR compared to yesterday's settlement after climbing earlier to 1,300 EUR/MWh, with a Q1 of 69.18 EUR rising to 865 EUR/MWh, after peaking at 930 EUR/MWh earlier.

The January contract reached a record level of 2,096.24 EUR/MWh in August.

“[There was] a bit of panic in the morning,” said one Dutch trader.

“There is not a good level of confidence in EDF's forecasts because they are revised downwards every time,” explains a second trader.

“The more you reduce short-term production forecasts, the more you increase the risk premium for future periods.”

This was reflected in the fact that the first-quarter contract jumped by almost 100 euros, even though none of EDF's announcements were for this quarter, he added.

“Risk of supply shortage”

“[EDF's announcements] are increasing the risk of a shortage of nuclear energy supplies this winter,” said Emmanuel Sire, CEO of the consulting firm SirEnergies.

“Despite all efforts [to increase nuclear supply], safety takes precedence over the risk of a power outage,” he added, referring to the fact that EDF announced on Thursday its intention to extend breakdowns in seven reactors amid corrosion probes and ongoing repairs.

As a result, it has reduced its annual production target by 5%.

“The lower end of EDF's [nuclear production] target would mean another four fewer reactors than in the current mandate in November and December,” said another trader.

“If there is uncertainty for December, the market believes it will be no different in January.”

However, “at the end of the day, it all depends on the weather anyway,” as colder temperatures have increased electricity demand, the Dutch trader said.

Moreover, while French nuclear production was very low, the interconnection capacity was not unlimited in terms of imports, “which indicates a risk of high prices in the event of a significant drop in temperature,” said Jean-Paul Harreman, director at EnappSys.