Impact of the French Nuclear Fleet on the Continental Power Market in 2023

We have never entered the winter with such a low production expectation from the French nuclear fleet.

At Volue, we usually calculate our ‘best guess’ in terms of nuclear output, taking into consideration the official available capacity derived by the UMMs as well as the latest yearly target published by EDF, deducted by the actual generation year-to-date.

Recently, we added to our prognosis the main takeaway out of the November update of the winter 2022-2023 outlook from the French grid operator RTE.

In the figure below (taken from the update), the comparison of the production forecast for September 2022 (red line) versus the very latest (violet line) is important. We adjusted our production forecast accordingly, reducing our ‘best guess’ mainly to December and January.

Our own graph below shows the current forecast for the rest of 2022 (black line) and the whole of 2023 (red line) in TWh/Month compared to the previous six years in delivery.

This is the reason we say that we have never entered the winter with such a low production expectation.

What can we expect from the markets, then? It depends on several important factors.

First and foremost, market development depends on consumption.

The weather and, in particular, temperature and wind production will play a major role in defining the tightness of the French market.

The so-called residual load (calculated as consumption minus wind and SPV generation) can fluctuate a great deal in winter, possibly reaching up to 90 GW in some hours (this occurred in 2017 and 2018).

This year, we expect a major impact on the system from demand response and demand destruction due to the ongoing energy crisis. Nevertheless, the French grid might see in some hours a residual load of up to 80 GW even with lower-than-normal consumption. Under such circumstances and with depleted nuclear production, the other decisive factor will be the contribution to the power balance from the XB (cross-border) flows.

The maximum import flows that we have observed into France so far has been 14.371 MW on 3 April 2022. Since then, a new DC cable was launched (in October), increasing by approximately 500 MW the NTC from Italy North into France. The border with the UK should allow 500-1000 MW more import into France.

All in all, we could expect, in exceptional circumstances, a total import into France of a maximum 16 GW.

With this in mind, depending on the residual load development, we can definitely expect strong volatility over the next few months, with the possibility of price spikes up to the cap of 4000 euro/MWh, if the weather turns very cold.