The French peakload contract for November delivery has risen above the corresponding UK power contract as traders remain jittery about a potential nuclear supply shortfall and a repetition of last year's nuclear supply crunch scenario.
For the first time since S&P Global Platts began assessing the November peak contract, the French November price flipped to a premium to the UK after it was assessed at Eur68.55/MWh on August 31, while the UK November contract closed at Eur67.05/MWh.
The premium was around Eur3-4.5/MWh at the start of September, and has increased to Eur6/MWh since then as the market remains nervous.
The French November peak price was assessed Tuesday at Eur75.30/MWh, while the UK November contract was assessed at Eur69.89/MWh, S&P Global Platts data showed.
French prices rose after nuclear regulator ASN asked to review documents relating to components manufactured by Le Creusot Forge, triggering uncertainty in the French and other European markets. Even CIF ARA coal and EU Allowances rose sharply Tuesday.
Market participants are nervous about a French nuclear supply crunch, especially during peak times in November.
"Imagine what will happen when the first notice about the cold spell in France arrives," a trader said. "Midday, peak and evening peak are the hours with the highest demand. November is bullish."
A UK power trader said "people are obviously comfortable with the off-peaks [with French baseload below UK baseload] so it's only the peaks, and probably certain hours of those peaks that people will be worried about."
Throughout 2015, the French November peak contract traded at a discount of Eur11-18.42/MWh to the UK contract.
However, in 2016 this scenario turned on its head, with French nuclear power subject to long periods of uncertainty as reactors were taken offline due to safety concerns.
The implications were seen in the European power markets due to country's traditional export position and the magnitude of investigations that affected as many as 22 of the 58 nuclear reactors in the French fleet.
Given the nervousness in the French power markets, November contract prices were seen at Eur129.25/MWh on October 31, 2016, against Eur122/MWh for the UK contract.
On November 30, 2016, demand during peak times was 80 GW, while maximum nuclear output was 49.1 GW, hydro generation was at nearly 14 GW, gas-fired output at 9.4 GW, coal-fired generation at 2.3 GW and imports maxed out at 6 GW.
