Massive price jumps on new French nuclear issues

Tuesday it was announced, that there are further security issues with the French nuclear power reactors. This caused big price jumps across the markets.

From time to time, the French nuclear power sector sends shockwaves through the European energy markets, and this happened again Tuesday. The French nuclear authorities (EDF) announced that several of the country’s nuclear reactors have welding issues, and that security checks will take place to see if they can continue operating.

So far, EDF has not taken any reactors offline, and for now, it is very uncertain, how big the problem is. It could be an issue, which blows over once the safety checks have been conducted, but in principle, it could also be a massive problem, which would mean that France would have to shut down several reactors during winter, where the French nuclear plants are essential for the European power markets.

Despite the uncertainty as to how serious the situation is, the European power and energy markets reacted very strongly to the news yesterday. If France has to shut down a large portion of its nuclear fleet, it would increase demand for coal and gas. The price on the 2020 contract on the important European NCG gas hub rose by a massive 7 % yesterday, the biggest day-to-day price jump for the contract ever. Coal and carbon markets edged up as well, and on the German power market, the 2020 contract was up by no less than 2.80 EUR/MWh, equaling 6 %.

The Nordic power market was affected heavily by the situation as well. Early Wednesday, the Nordic Q4-19 contract is trading at 38.85 EUR/MWh, an increase of around 7 % since the news broke Tuesday. The 2020 contract has gained around 2 EUR/MWh, equaling 6 %.

The markets will follow the news from France closely during the coming time, until it is clear, how big the reactor problem is, and how big an influence it will have on the markets.