If the prices of oil and gas rise with the war in Ukraine, those of electricity are no different. “Forward electricity prices for the winter of 2022-2023 for delivery in France are extremely high” and have “almost doubled in a few weeks”, the Energy Regulatory Commission (CRE) notes in a report. . The electricity delivered in the fourth quarter of 2022 was worth over 800 euros per megawatt hour (MWh) in the last few days, while in the first half of June it was still less than 500 euros, an already very high level.
On Tuesday, electricity for next year’s delivery in France hit a record high, at € 495 per MWh. This increase followed that of gas, after the announcement the day before of new drastic cuts in deliveries via the Nord Stream pipeline announced by the Russian gas giant Gazprom. However, prices in France have risen more than in its neighbors, particularly in Germany, while France benefits from a better supply of gas, the prices of which indirectly affect those of electricity.
The French market under surveillance
CRE therefore notes that futures prices in France no longer obey the usual logic. “They reflect expectations of a severe shortage or high risk premium in the French electricity market, and probably a combination of the two,” he notes.
“In this context, in addition to the extension of its enhanced market surveillance actions, CRE will formally question market players about their strategies and expectations for the winter of 2022-2023”, he concludes. The Commission adds that “it has strengthened its monitoring of the French wholesale market since the second half of 2021” and “has not observed to date any behavior susceptible to market manipulation on forward electricity prices”.
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