France economy

France’s problems with nuclear power plants mean more energy uncertainty for Europe

The woes facing EDF’s nuclear power stations in France – Europe’s biggest power producer – will increase pressure on war-hit European energy markets after the summer.

EDF, which is the backbone of Europe’s integrated electricity system, has cut its nuclear output target for the third time this year, the latest sign that Europe’s power crisis is deepening.

Western Europe has depended for decades on electricity exports from EDF’s nuclear power plants. The cuts are another blow to European energy security just as the region is starving Russian supplies of everything from natural gas to coal and oil because of the war in Ukraine.

EDF’s drop in output is driving up prices, just as soaring inflation is driving up the costs of everything from gasoline to food. This could get even worse in winter as France, a traditional electricity exporter, could be forced to import more from its neighbours.

French prices are the most expensive in Europe, with contracts for the period almost double the levels in Germany. The utility cut its forecast as it realized that “stress corrosion” issues affecting some of its reactors will require more checks and repairs. The outlook for the following year remains unchanged for now, the firm said.

“We have fine-tuned the repairs to be made,” said Régis Clément, deputy director of the company’s nuclear division, during a press conference. “We need to cut more pipes” to carry out other checks “and more repairs to manage”. “, he said.

The big test will come when temperatures start to drop towards the end of the year. It will not take several cold days to jeopardize the French electricity supply, according to Emeric de Vigan, managing director of the French energy analysis company Cor-e.

“With such low nuclear availability, if we hit 2 degrees Celsius below normal in the winter for a few days, we could have problems, it would be really tight,” Mr de Vigan said. Paying customers and factories to reduce consumption are steps that will likely need to be taken, he said.

Russian gas

There was better news for short-term wholesale gas costs in Europe. Dutch wholesale gas prices reversed earlier gains on Thursday amid continued uncertainty over the potential impact of demands from European buyers to pay for Russian gas in rubles and a weaker carbon market.

“Volatility will remain extremely high over the next couple of days and the market could go either way depending on Russian news and ruble payment demands,” Energi Danmark analysts said.

Given the mild weather and a comfortable gas system, the market could trade lower, a trader said.

The first payments under a Russian decree requiring European customers to pay Russian gas deliveries in rubles are expected to be due this week, but there are still uncertainties over whether companies could do so. do so without violating the sanctions.

The EU this week told member states they could continue to buy Russian gas without breaching sanctions imposed on Russia following its invasion of Ukraine, but advised against opening a bank account in rubles.

Bloomberg and Reuters