Nuclear: EDF revises further down its production forecast
Veronique Le Billon The 03 / 11 / 2016
Electricity prices on the wholesale market are climbing to record levels. EDF has delayed a few weeks the restart of several reactors.
As outside temperatures drop in France, they rise to the electricity markets. While the megawatt hour (MWh) was trading around 70 euros a few days ago, we now have to pay 275 euros for delivery next week. For peak hours, the wholesale price has even exceeded 500 euros / MWh, an unprecedented situation since the historic peak of cold in France, in February 2012when consumption reached 102,1 GW.
The situation is partly related to the scheduled drop in temperatures: they should be lower from 4 to 5 degrees to seasonal norms next week. To produce more electricity, the most expensive means of production are therefore gradually called on the grid (coal, gas, fuel oil, etc.). In France, the most "heat-sensitive" European country because of the large share of electric heating (about 30%), one less degree leads to an additional demand for 2,4 gigawatts.
300 million euros less Ebitda
But if this early cold worries the markets, it is because it combines with the exceptional shutdowns of nuclear reactors. Thursday, twenty slices were still stationary, representing 20 GW, nearly one third of nuclear capabilities. And the manager of the electricity transmission network RTE, which must present this Friday its annual scenario of the "passage of the winter", had to review in haste its forecasts for the weeks to come: EDF him meant Wednesday evening that it shifted the restart of five nuclear reactors. The electrician has also revised down a third time Thursday night, its nuclear production target for this year, between 378 and 385 terawatt hours (against 414 TWh originally planned). This further reduces by 300 million its forecast of Ebitda for 2016 (between 16 and 16,3 billion).
Only seven reactors are scheduled to produce electricity again by mid-November. And four additional installments must be stopped for three weeks in December and January following the controls requested by the Nuclear Safety Authority. The market is therefore likely to remain highly volatile in the coming weeks. "As soon as peak demand for electricity surpasses the 85 GW in the current context of high maintenance, spot electricity prices may rise sharply," notes Hélène Bonfils, consultant at IHS.
Higher prices will not have an immediate effect on consumer bills. "Prices reflect marginal volumes, because suppliers who have done their job properly have already covered the needs of their customers," says a supplier. For households, the formula for calculating retail prices is also smoothed over a long period. But current concerns still fuel a rise in wholesale prices for delivery next year. At 49 euros / MWh, they now far exceed the level of the Arenh (42 euros / MWh), the price at which EDF must sell to its competitors up to a quarter of its nuclear production, a counterpart to its monopoly to animate the competition in the supply of electricity. It is therefore likely that suppliers choose this option - they must decide in mid-November. Given the risks of speculation, EDF had asked for a suspension of this device, but the government chose to delay.
Beyond the evolution of market prices, some people now fear load shedding in case of harsh winter. "Our concern is the impact on processes of large industrial customers in case of load shedding," says the supplier. "We do not expect more than 100 gigawatts of consumption this winter because the demand has dropped in recent years," notes however Hélène Bonfils, IHS.
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