France’s woes with nuclear power plants means more energy uncertainty for Europe

EDF, which is the backbone of Europe’s integrated power system, cut its nuclear output target for a third time this year, the latest sign that Europe's power crisis is worsening. 

The woes facing the nuclear power stations at France's EDF — Europe's largest electricity producer — will increase the pressure on war-hit European energy markets after the summer. 

EDF, which is the backbone of Europe’s integrated power system, cut its nuclear output target for a third time this year, the latest sign that Europe's power crisis is worsening. 

Western Europe has for decades relied on exports of power from EDF’s nuclear stations. The cuts are another blow to European energy security just as the region is weaning itself off Russian supplies of everything from natural gas to coal and oil because of the war in Ukraine.

Less output from EDF is sending prices higher just as soaring inflation is pushing up costs for everything from petrol to food. It could get even worse in winter as France, traditionally an exporter of electricity, may be forced to import more from its neighbours.

French prices are the most expensive in Europe, with contracts for the period almost double levels in Germany. The utility cut its forecast as it realised that “stress corrosion” issues affecting some of its reactors will require more checks and repairs. The outlook for the following year remains unchanged for now, the firm said. 

"We fine-tuned the repairs to be made,” Regis Clement, deputy head of the company’s nuclear division, said during a media conference. “We’ve got to cut more pipes” to carry out further checks “and more repairs to handle”, he said.

The big test will come when temperatures start to fall toward the end of the year. It won’t take many days of cold weather to jeopardise French power supplies, according to Emeric de Vigan, chief executive officer at French energy analysis firm Cor-e.

“With such poor nuclear availability, if we reach 2 degrees Celsius below normal in the winter for a few days we could be in trouble, it would be really tight,” Mr de Vigan said. Paying customers and factories to lower consumption are steps that likely will need to be taken, he said. 

Russian gas

There was better news for short-term wholesale gas costs in Europe. Dutch wholesale gas prices reversed earlier gains on Thursday, amid ongoing uncertainty over the potential impact of demands for European buyers to pay for Russian gas in roubles and a weaker carbon market.

"Volatility will remain extremely high the next couple of days and the market could go either way depending on what news comes out regarding Russia and the rouble payment demands," analysts at Energi Danmark said. 

Given mild weather and a comfortable gas system, the market could be trading lower, a trader said.

It is widely expected that the first payments under a Russian decree demanding European clients pay for Russian gas deliveries in roubles are due this week but there is still uncertainty over whether companies could do so without breaching sanctions.

The EU told member states this week they can keep buying Russian gas without breaching sanctions imposed on Russia following its invasion of Ukraine, but advised against opening a bank account in roubles. 

Bloomberg and Reuters