French Power Grid Curbs Set to End This Week, More Due in August

Eamon Akil Farhat and Francois de Beaupuy, Bloomberg News

, EPEX

(Bloomberg) -- Grid limitations in France that constrained its electricity exports are due to end by the end of the week, potentially easing a bottleneck that some blame for higher power prices in neighboring countries.

Maintenance work and unplanned outages in parts of France has cut electricity transmission capacity to Belgium, Germany, Switzerland and Italy since early March, according to grid operator RTE. The reduced exports mean its neighbors are paying more on average for power, with German day-ahead prices for Friday settling at three times the level for France. RTE told Bloomberg that the situation would be back to normal by the end of the week.

RTE’s grid cuts prompted Belgium’s gas and electricity regulator CREG to demand more information from its French counterpart, saying communication so far “doesn’t delve into the details of the problems.” With another round of export curbs planned by RTE for August through October, the works are “therefore not exceptional, unforeseeable circumstances,” a CREG spokesperson told Bloomberg News.

In total, RTE offered 48% less net export capacity to Belgium and Germany in April compared with a year earlier, according Sabrina Kernbichler, lead power analyst at Energy Aspects Ltd.

France’s fleet of nuclear plants makes it the backbone of Europe’s power system. Should its grid constraints become an issue in August, it could have repercussions for markets like Italy’s, which relies on France’s consistent cheap power for cooling during hot summer nights. Without those supplies, more expensive gas-fired generators will have to fill the gap.

Fossil fuels are likely to make up a greater part of Europe’s generation in the coming days as wind output is set to slump to six-week lows in Germany over the weekend. Wind generation will average about 3,444 megawatts next Monday, according to Bloomberg models, well below Thursday’s average of 24,734 megawatts.

French power for June rose 6.7% to close at €42.75 per megawatt-hour in Paris. In Germany, the equivalent contract rose 6.3% to €70.98 per megawatt-hour, approaching the it’s highest price since early January.

(Updates with wind generation forecasts in sixth paragraph. Earlier version of story corrected description of Belgium’s CREG in third paragraph)