French Power Surges Amid Low Availability at EDF Nuclear Plants

  • Next-year power contract advances to highest in 13 months
  • EDF reactor availability at 64% versus 76% a year ago

French power prices jumped amid concerns that reduced availability at Electricite de France SA’s nuclear plants may limit supplies as the winter heating season starts.

Year-ahead prices surged to a 13-month high while the October contract rose to a record Thursday. EDF has 64 percent of its 58 reactors available compared with 76 percent a year ago, according to data from French grid operator RTE. Several halts have been extended as the French nuclear regulator inspects steam generators for potential anomalies.

Demand for electricity from French households using it for heating usually rises in October when winter begins. The nation’s nuclear safety authority said in June that EDF needed to carry out checks to rule out potential anomalies on steam generators at 18 of the utility’s reactors. EDF cut its nuclear output targets for the year on Sept. 21 after the safety checks were taking longer than expected.

Prices in France are particularly “sensitive to material reductions in nuclear output”, said Martin Young, an analyst at RBC Capital Markets. “Given EDF’s ongoing issues with its nuclear fleet, we expect pricing could be volatile until things become clearer.”

Peak power demand is set to rise 1.7 percent next week and a further 2.5 percent the week of Oct. 10, according to RTE data.

Safety Checks

French 2017 power gained for a second day, rising as much as 3.5 percent to 39.55 euros ($44.37) a megawatt-hour before trading 1.4 percent higher at 38.75 euros by 11:40 a.m. Paris time, according to broker data compiled by Bloomberg. The October contract climbed as much as 4.5% to a record 45.25 a megawatt-hour, the data show.

Additional safety checks at a dozen reactors are included in EDF’s nuclear production forecasts for 2016 and 2017 published on Sept. 21, an EDF official said, declining to be identified citing policy. These forecasts take into account the possibility of prolonged planned outages at some reactors, the official said.

“There is a price risk in the inspections leading to further outages,” according to Roland Vetter, head of research at Praxis Utility and Infrastructure Equity Fund Ltd. “If there’s any irregularity they have to assess safety risk. If they find out they have to replace steam generators things would get expensive for EDF.”

Before it's here, it's on the Bloomberg Terminal.