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French power market spikes – will history repeat itself?

Eylert Ellefsen
Archived blog post. This blog post has been transferred from our previous blogging platform. Links and images may not work as intended.

Towards the end of 2022, power prices across Europe were extremely high as cold weather, a lack of wind power, strong gas markets and low levels of electricity generation from French nuclear plants all combined to create the power market’s perfect storm. More specifically, French power prices skyrocketed in week 50 as the supply situation became scarce. In reality, power supplies were only secured thanks to reduced consumption and strong imports, supported by all available French power generators running at maximum capacity.

Knowing what we do from that event, this blog will present a case study of how the power balance could look if we were to see a similar cold snap by mid-February. The case study is based on 40 years of climatic scenarios of consumption, wind power and solar production, as well as the updated estimates for French nuclear availability.

Since the events of week 50 2022, market prices for gas and power have declined strongly, so we will focus on the physical balance and supply situation only.

Findings

The French supply situation during week 50 last year was, to a large extent, secured by a 6-7% consumption reduction in both France and it’s neighbouring countries. The reductions made by those surrounding states allowed a net peak hour import of about 7 GW to France.

In a similar cold scenario by mid-February 2023 will not result in such a strained power balance as the one seen in December. This is due to higher expected levels of nuclear production (4GW) and a lower residual load (3 GW). When you put them together, this results in a power balance which has been improved by 7GW in comparison to last December, therefore reducing French reliance on imported power.

Supply situation week 50 2022

We have studied the average peak-hour balance for Monday and Tuesday of week 50 2022, when consumption and spot prices peaked. The average temperature came out at 1.3 – 6.9 Celsius, which is 5.6 degrees colder than normal, while the residual load (consumption-wind-solar) hit an all-time high of 74.3 – 60.9, which is 13.4 GW higher than normal. This was an extraordinary event as you can see in the image below.

The average peak spot price came out at 566 €/MWh for those days, with hourly prices spiking to a maximum of 753 €/MWh.


In order to cover the demand required in week 50 2022, the hydropower system ramped up strongly. Nearly 7 GW of power was added by this source, including river plants, storage plants and pumping storage plants. In addition, reduced consumption of 6-7% in the neighbouring countries increased their export capacity towards France in this situation, as you can see in the table below.

Outlooks for a cold spell during February

The power and gas market prices have eased significantly since last December, but still there is a chance of getting a cold spell during February, placing greater pressure on the French power balance.

EQ has made a study of the climatic scenarios for mid-February (week 7) to compare potential cold scenarios with the situation observed in week 50.

The idea is to find the 3 coldest weeks in these scenarios from 1990-2021, update the power balance by using today’s updated nuclear capacity and assume the maximum available production from other sources, like we saw during week 50.

The table below shows the data for the cold scenarios weeks, as well as a comparison to the week 50 data.

The key things we are able to observe from these scenarios are:

  • The temperature seen during week 50 2022 are close to the lowest we have seen in 30 years, with the “worst case” years being 2010, 1991 and 2003.
  • Consumption is, on average, very close to the week 50 level
  • Residual load in the scenarios is 3 GW lower on average than week 50 2022
  • Nuclear production is typically around 4 GW higher in the scenarios (based on EDF-data)
  • Total production is about 6 GW higher
  • Net exports are around 6 GW higher (average)

We see from these numbers that there is no chance that a cold spell from mid-February will challenge the supply situation as hard as the December incident. Nuclear capacity and “worst case” residual load would still result in a 3-4 GW improvement, contributing overall to a power balance eased by 6-7 GW.

Accordingly, the import balance would be improved by nearly 6-7 GW, and as an average nearly zero net import would be required at average peak periods. This allows us to conclude that the supply situation in the coldest scenarios for mid-February is estimated to be far better than during the cold spell in December (week 50).

Please contact EQ if you have questions about the French situation. EQ can be contacted at Support@energyquantified.com

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