France will go through an energy alarm situation this Monday. RTE, Red Eléctrica’s counterpart, has declared the orange alert level due to the risk of electricity supply problems in the country Due to the heavy shutdown of its nuclear power plants, almost half of the installed fleet is down for maintenance.
This situation has caused the average price of electricity to rise today to a measure of 551 euros/MWh, although will reach peaks of 2,987.78 euros/MWh between 8 and 9 in the morningpractically, the maximum level that the market can reach and that is limited to 3,000 euros.
As indicated by the company, a significant drop in temperatures which will take electricity consumption to reach 73,000 MW at 09:00. By that time, electricity production should be 65,000 MW, but France should be able to import up to 11,000 MW.
Spain and Germany have served as a support base for the French electricity system. In fact, in recent days the level of gas exports to France from Spain has also increased notably.
Rationalize consumption
RTE, for its part, does not anticipate power outages this Monday, unless there are unforeseen events during the weekend. The network operator plans to update its analysis today according to the latest weather forecasts and the level of electricity production, but for the time being, it has not made any additional forecasts.
The French operator has asked companies and municipalities to moderate their consumption this Monday morning (in particular between 7 and 10 am) and asks the French who can do so to bring forward their electricity consumption to this weekend and not to Monday as regards the use of household appliances (such as dishwashers or washing machines).
RTE explains that if everyone in France turns off a light bulb, this will mean a saving of 600 MW in electricity consumption, which is approximately the consumption of a city like Toulouse.
Furthermore, in the current energy context, any reduction in electricity consumption makes it possible to limit the use of gas-based generation. In fact, the reduction in consumption leads to a decrease in the use of gas power plants and contributes to saving gas reserves for the coming winter.
Nationalize EDF
The supply crisis in France also occurs in the midst of a debate on the possible nationalization of the electric company EDF. Emmanuel Macron faces April as the key month that could give him re-election as head of the French Government. If so, the promise to nationalize the electric company EDF (where it has 84% of the capital) would be a reality as promised by the president, very concerned about the company’s high debt and that it could go further in the face of the energy crisis current.
Macron has announced his intention to cap energy prices – and thus also EDF’s profit. In addition, this situation has made him return to nuclear energy. In any case, nationalizing EDF “would only happen once the French elections are over and as long as Macron is victorious,” they point out from Barclays.
A nationalization of all or part of Electricite de France would not result in a further upgrade of the company’s credit ratings in the absence of other measures, S&P Global Ratings said.
The possibility of nationalizing France’s largest utility company has been suggested by French President Emmanuel Macron, who sees it as a means of supporting EDF’s role as the largest energy provider and positioning it to be a key player for help France achieve a net zero future.
However, EDF’s most pressing issues are operational weaknesses, which are likely to wipe out EBITDA in 2022, and total adjusted debt, which is projected to rise to more than €92bn by the end of 2022, up from €74bn. million euros by the end of 2021. These problems are likely to force EDF to carry out a capital increase, which is relatively different from the nationalization process., according to the report. EDF already benefits from a high probability of extraordinary support from the French state, the S&P report noted, adding that a higher level of state support would require a significant change in EDF’s status because it operates in a competitive market. It may also depend on the regulatory regime, the extent of nationalization and the level of competition.
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