We are pleased to release our report detailing the implications of COVID-19 on the French power market. This document also serves as an update to the analysis presented in our H1 2020 power market forecast (published in April) to account for EDF’s latest announcement on reducing nuclear output until 2022.
Key highlights include:
- Characterised as a pandemic by the WHO in March, COVID-19 has led to far-reaching consequences across the global economy and inevitably, the power industry
- Strict lockdown measures and restrictions on economic activities have resulted in steep declines in European gas prices and power demand. Consequently, monthly average wholesale prices in France have dipped to a recent historic low of 14.7 €/MWh
- Demand is starting to recover with the easing of lockdowns – average weekly demand on w.c. 11 May has recovered to levels in late March 2020
- Lasting implications could ensue in power markets if a severe economic downturn develops globally. Aurora’s Central view assumes a mild downturn where demand increases to previously assumed levels by 2021, while the recovery in commodity prices happen by the mid- 2020s
- Relative to a pre-COVID scenario, lower demand and commodity prices result in average annual baseload prices falling by 6.7 €/MWh (or 14%) between 2020 – 2023. However, EDF’s decision to reduce low cost nuclear output limits this to 3.7 €/MWh (or 7.8%)
- Similarly, average annual solar and onshore wind capture prices dip by 11 – 14% between 2020-2023. The reduction in EDF’s nuclear production limits this to 2 – 8%
- The reduction in French nuclear output and exports increases the baseload price of neighbouring countries by up to 1.8 €/MWh
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