Cold Snap Opens `Season to Watch' for Electricite de France Nuclear Plants
A cold snap in France over the next week will test Electricite de France SA’s pledge to increase production at nuclear reactors and cut reliance on imported power this winter.
Chief Executive Officer Henri Proglio is working to raise output after strikes and repairs pushed generation to a 10-year low in 2009. The Paris-based utility said last week that output improvements in 2010 would be at the lower end of a target range. Temperatures as much as six degrees below average are forecast for the end of this week.
“It’s a season to watch for EDF,” said Louis Boujard, an analyst at Aurel BGC, who has a ‘buy’ rating on the shares. “This winter should be less catastrophic than last because EDF won’t be so handicapped.”
Strikes wreaked havoc last year on a maintenance and refueling schedule designed to halt plants during months when demand is lowest. Days after Proglio took the helm a year ago, Prime Minister Francois Fillon told him his first goal should be to improve output at the company’s 58 French reactors.
EDF today had 49 reactors online compared with 44 a year earlier, according to an EDF spokeswoman and data collected by Bloomberg. The utility also has seven thermal plants connected to the grid, she said.
Temperatures will be as much as six degrees below normal for the season by Nov. 26, according to the websites of Meteo France and power grid operator Reseau de Transport d’Electricite, a wholly owned unit of EDF.
French power demand is expected to reach 85,700 megawatts on Nov. 26 and rise as high as 88,300 megawatts on Nov. 29, according to the grid. EDF will be a net power importer today, even before temperatures drop later in the week.
Peak consumption reached a record 93,080 megawatts on Feb. 11, when temperatures were colder than usual, compared with a 2001 annual high of 79,600 megawatts, according to RTE data.
French baseload power for tomorrow rose 3.5 euros, or 5.6 percent to 66 euros ($88.11) a megawatt-hour, as of 11 a.m. Paris time, according to broker data compiled by Bloomberg. The next-day contract has risen 13 percent so far this week.
France is linked to Britain via a 2,000 megawatt cable and electricity flows to whichever market offers the highest price. Power for tomorrow in France was at a $10.55 premium to Britian’s baseload contract.
A 1-degree drop in winter temperature results in a 2,100- megawatt increase in power demand, or double the consumption of Marseille, according to RTE. French demand is more sensitive to cold snaps than many other European countries because more households have electric heating.
France, which gets more than three-quarters of its power from EDF’s reactors, has raised imports since 2001. The grid earlier this month forecast the country may import electricity from the end of November until the end of January.
EDF last week said French 2010 nuclear output would likely be within a range of 405 terawatt-hours to 415 terawatt-hours.
The utility is expecting a full-year nuclear plant availability rate, a measure of how many reactors are operating, of nearly 78.5 percent, at the low end of a target because of unplanned halts in October, Chief Financial Officer Thomas Piquemal said. In May, EDF said it was aiming for an improvement of “at least” 1.5 percentage points in 2010 from last year’s 78 percent.
Shortage in 2013
“The French production numbers weren’t bad, although there is still a lot of work to be done,” Boujard, the Aurel BGC analyst, said by phone. “The acceleration of nuclear production hasn’t been blinding and the target for 2011 of just being better than 2010 could have been better.”
France faces a shortage of capacity beginning in 2013, according to RTE. A new EDF reactor in Flamanville, Normandy, due to start selling power that year, will barely compensate for the shutdown of outdated fossil-fuel plants.
France is expected to close 3,600 megawatts of coal-fired power plants from 2013 to 2015, along with other heating oil- powered generators, according to a report by the grid published in July. France plans to add 4,800 megawatts of gas-fired plants, some of which are complete.
Germany by contrast plans to add at least 3,000 megawatts of solar and 6,000 megawatts of thermal power by 2013, Ingo Klause, lead power trader at Vattenfall Energy Trading GmbH, said by e-mail.
The spread between French and German power prices for 2013 will widen as the market focuses on France’s needs, he said.
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