Electricity: Prices are likely to triple in France this winter

Electricity: Prices are likely to triple in France this winter

There is no risk of cutting underway next winter, Emmanuel Macron said in early June, just as the German government sounded the alarm and launched its energy emergency plan. And for good reason, ” when there is a need, we bring our supplies to the European market “, The Head of State justified, claiming to want” reassure ” the French.

Yet, from this statement, the worrying signs have multiplied. Until prices hit the roof: in France, these are currently trading at a staggering 790 euros per megawatt hour (MWh) for October-December 2022 on the EPEX exchange, which is two to three times more than in neighboring countries! And also approaching 1,500 euros per MWh for peak prices, compared to less than 500 euros in Germany. A ” huge difference “showing that the market” anticipate failure in France, warns Nicolas Goldberg, Colombus Consulting’s energy specialist. Recall that before the health crisis the price was around fifty euros per megawatt hour.

The nuclear asset turns against France

Indeed, the country is faced with a situation specific “, Which further exacerbates the crisis and increases the likelihood of an energy shortage this winter, explains Jacques Percebois, economist and director of the Research Center in Economics and Energy Law (CREDEN). In fact, while its electricity mix still depends, in theory, for almost 70% on the nuclear fleet, it is going through a period of historical unavailability. According to the European network of operators of the electricity transmission system ENTSO-E, 27 of the 56 reactors in the area are in fact closed.

In question: the delay in maintenance due to the coronavirus, which is therefore decreasing, for several plants, right now, but above all the recent identification of a corrosion defect on various infrastructures, the causes and actual extent of which remain unknown . In February EDF had thus presented a program of checks to verify the number of reactors affected by the anomaly, and had announced that it would stop as a priority, and by the end of April Bugey 3 and 4, Cattenom 3, Chinon 3 and Flamanville 1 and 2.

“Without this cracking problem that pushes EDF to close part of the park, we would have a network without margins, but not with a negative margin, as is currently the case”, comments Nicolas Goldberg.

In other words, “ the French nuclear advantage is turning into an element of weakness, and will remain so until the reactors are available and the problem remains unsolved adds Jacques Percebois.

Border congestion

Therefore, France will necessarily import large quantities of electricity to meet demand this winter, says Jacques Percebois. And especially during consumption peaks, since these ” usually more frequent and louder in France than elsewhere in Europe, as we warm up much more with electricity than our neighbors “Says the economist.

But here it is: border countries are also likely to face severe supply strains, or at least not have a sufficient surplus to meet French needs. To protect itself from this, Germany specifically decided to keep nearly 14 GW of coal-fired power plants in operation that were due to close this year. But even with this additional power, Berlin predicts a shortage should Russia decide to further reduce its supply of gas, which is still essential to supply its plants.

Above all, the exchange possibilities will still be limited by technical obstacles. ” We have to expect bottlenecks related to grid interconnection capacities, currently limited to around 13 GW. This is why in times of tension there is always congestion at the borders. This also explains why the wholesale price is not the same everywhere “, Observes Jacques Percebois.

Consequently, the latter should explode in France, despite the country’s connection to the European electricity market. The impact of this phenomenon on consumer bills remains to be seen. In fact, last winter the state set up a price shield, which is still in place today, to protect citizens from the price spike. But while the situation promises to worsen, such a device could weigh heavily on public finances.

«To limit the increase in the regulated sale price to 4% instead of 40%, the public authorities have already intervened massively, at all levels. They put suppliers in check, while helping consumers, in order to ensure that the market holds up. It is an extraordinary interventionism, which has cost taxpayers fortunes “Xavier Pinon, co-founder and director of the energy broker Selectra, pointed out to La Tribune a few months ago.

An obvious lack of controllable margins

Under these conditions, the government has no choice but to sound the alarm, both to increase national electricity production and to reduce demand. In particular, he announced his intention to urgently reopen the Emile Huchet coal plant and to launch a “sobriety” plan, which should push France to save as much energy as possible in the area.

But in the event of a cold winter, these resources will remain largely insufficient, as the country has little controllable room for maneuver other than nuclear power.

For many years we have no longer built controllable means of production [qui permettent de fournir de l’électricité sans variation liée aux conditions météorologiques ou géographiques, ndlr]. We even closed some of them, instead building only wind turbines and solar panels. Inevitably, this destabilized the network and increased the risk of demand not being met. “, Slipped in The gallery André Merlin, the first director of RTE, last April.

The government in particular recorded the end of the Fessenheim nuclear power plant, in Alsace, which was definitively closed in 2020. “This represented only 1.8 GW, so maintaining it would not have been enough, even if it would have provided welcome margins. But we have also turned off more than 10 GW of fossil fuels since 2012. Which is good for the climate, but logically leads to a significant lack of controllable vehicles. Added to this is our lag in energy efficiency, particularly in buildings, which would at the same time reduce consumption, “according to Nicolas Goldberg.

Especially since the few projects launched to compensate for these closures have accumulated setbacks. In particular, the construction of the Flamanville EPR nuclear reactor (1.6 GW), delayed by more than ten years, and still not connected to the grid. But also the Landivisiau gas plant, managed by TotalEnergies and put into service last April, after numerous program delays.

In terms of uncontrollable installations, France’s balance sheet is also not very good, as France has only one offshore wind farm, connected to the grid only a few weeks ago. Overall, the wind sector is still in difficulty: as of March 31, 2022, installed power amounted to just over 19 GW, which is almost half the targets of the Multi-Year Energy Program (EPP). And in terms of photovoltaic solar energy, France produces only 2.2%, or three times less than Germany or Italy.

Read also: Wind power: construction costs explode, the European model no longer stands up to Chinese competition

Cascading consequences on the sector

A ” combination of unfavorable factors sums up Jacques Percebois, whose consequences could be important. In case of shortage, domestic consumers will still have priority “, remember. In other words, companies will be the first to see themselves rationed, especially the most energy-intensive, something that hasn’t happened since the 1950s. So much so that some producers are trying to take the initiative, like Stellantis, which is looking for a partner to produce its own. power.

Stellantis wants to produce its own energy to circumvent the surge in electricity prices (Carlos Tavares)

Last April, the executive had thus published a decree that provided for load shedding, or the temporary and planned reduction of natural gas consumption by some consumers in the event of a shortage. In the first place, the 5,000 sites that consume more than 5 GW / h per year will be affected, as well as those that carry out missions of general interest (schools, hospitals, nursing homes, etc.). This could weigh heavily on the French industrial fabric, already shaken by an endless price explosion.