Concerns for the security of French electricity supply this winter have recently mounted, as power market prices continued to soar, and fears of a blackout grew.
In August, with many nuclear reactors under maintenance and fears of an interruption in Russian gas supply, buyers purchased electricity futures for more than 2000 €/MWh, setting an all-time record. In parallel, RTE announced the activation of the “Ecowatt” traffic-light system: although most scenarios it envisaged did not yield to loss of load, the uncertainty in the coming winter pushed the French TSO to put in place preventative measures, and supervise the electricity system earlier than usual.
Those high prices have also acted as a boon for renewables developers, who can now temporarily benefit from an 18-month derogation and sell electricity directly on the wholesale market, reaping very high short-term cashflows.
Since then, both the French government and the European Commission announced plans to reduce peak demand in the winter, to assuage concerns. Even though electricity futures have since then stabilised at 500 EUR/MWh, the volatility of prices on both the SPOT and futures markets suggest that prices are still likely to remain highly sensitive to new changes.
In light of those developments, Aurora modelled power price scenarios for this winter, to better understand its implications and likely outturn. We presented our findings at a webinar on 17 October and are now making the content available via the presentation.
Key questions explored include:
- Why have French power futures been so high? Do French futures reflect market conditions?
- Can solar and onshore wind assets capture those prices? What discount to baseload should renewables developers expect in the winter?
- What measures are planned to reduce power demand? What impact will they have on power market prices and loss of load expectations?
Please use the below button and subsequent form to access the presentation.