Electricity prices in Germany and France hit record highs as gas compression tightens
(Bloomberg) – The cost of French electricity has hit a new record high as its nuclear fleet faces further outages ahead of what is expected to be a very costly winter.
Futures soared 15% to 900 euros per megawatt hour, more than 10 times the price at the same time last year.
The push is fueled by Electricité de France SA’s announcement that more of its reactors will take longer to get back up and running after shutdowns. The outages affect power plants with a combined capacity of 8,380 megawatts, or nearly 14% of France’s total nuclear capacity.
Europe is in the throes of an energy crisis amid tight hydroelectric supply and natural gas cuts in Russia, which are driving up the price of fuel used in power plants across the continent. Supplies are expected to fall further from August 31, when Russia’s Gazprom PJSC plans to shut down the Nord Stream gas pipeline to Germany for three days of maintenance, raising fears shipments may not resume.
In France, six reactor shutdowns have been extended since Wednesday afternoon, as well as a new one announced at the Paluel 4 reactor for four days. Some of the shutdowns last only a few days, while others have been extended for up to two months.
Électricité de France SA, a struggling state-owned company, is facing full nationalization under government plans to get the country’s electricity system back on its feet. France normally exports power to neighbors like the UK and Germany for most of the year, but the reverse is expected in 2022, and it may need to import power for long periods this winter – if its neighbors have the capacity to supply it.
Electricity for the French winter also becomes particularly expensive. Baseload energy for November gained 9.2% to 1,660 euros, with peak energy – for periods of high demand – trading at 2,881 euros.
Pressure is mounting on European leaders to ease the pain of their citizens. On Friday, the UK regulator is expected to announce an increase in household bills to around three times the level of last winter, further stretching consumer budgets and raising the prospect of a recession.
In Germany, Europe’s biggest market, electricity prices for next year have soared 23% to a record high of 792 euros per megawatt hour.
Daily prices also hit record highs across Europe, including Germany, France and the UK. The highest was in Italy, where electricity jumped 17% on Friday to a record 718.71 euros per megawatt-hour, according to data from Gestore dei Mercati Energetici SpA.
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