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Analysis: French nuclear outages support rally in European carbon prices


August CCGT demand in Spain, France up by 93%, 53%

Power prices higher on French nuclear outages, delays

European weather forecasts to turn dramatically cooler Thursday

London — Extended nuclear outages in France coupled with above seasonally normal temperatures have brought power prices to hit record highs as lower French power exports pushed fossil fuel generation higher in neighbouring Spain and Italy.

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Daily CCGT demand in August surged in Spain, France and Italy by 93%, 53% and 35% respectively to 25.72 million cu m/day, 8.99 million cu m/day, and 67.6 million cu m/day Tuesday, data from S&P Global Platts Analytics showed.

South Europe CCGT

The French-Spanish power flow balance flipped from 22 GWh net exports from France August 20 to 4 GWh net imports into France August 22, Red Electrica data showed. France turned into a net importer as domestic nuclear reactor output was reduced due to unplanned outages.

A reduction of French electricity exports to Italy has compounded the impact of strong domestic demand in the last days and tightened the Italian power market, traders said. This has pushed gas-for-power demand to hit a 10-day high at 67.6 million cu m Monday, or approximately 404 GWh, according to Platts Analytics data.

The Spanish whole power price at the OMIE spot exchange settled for Wednesday delivery at Eur68.52/MWh -- marking a year-to-date high -- as low domestic wind output added pressure to the export pull to France. The spot contract was the highest since December 13, 2017.

"Power prices have risen sharply because of the French nuclear reactors, so the clean spark spread is attractive," one German trader said.

Italian Q4 18 CSS steady as EUAs rally, Spanish edge lower

The rise was largely triggered by nuclear woes in France, led by several nuclear outage announcements, which are set to impact 2.37 TWh of nuclear output between August 20 and September 19, according to Platts estimates. French baseload day-ahead power prices rose to a fresh five-month high of Eur68.02/MWh in the EPEX Spot auction on Tuesday.

Spanish gas-for-power demand was set to generate a total of 146 GWh or 26 million cu m/day Wednesday, the highest since August 6, amid low wind, lower French imports and a peak above seasonal temperatures.

Coal-fired generation was seen rising to 153 GWh Wednesday, also at the highest level since August 6.


Higher fossil fuel generation to offset an unexpected dip in French nuclear output over the last few days has contributed to stronger demand for carbon emission allowances under the European Trading System, with an impact on carbon prices.

The significant increase in EUA carbon allowance prices in the week starting August 20, which rose from Eur18/mt Monday to Eur20/mt Wednesday and to a 10-year high, have put additional pressure on coal margins, with coal plants generally twice as carbon-intensive as gas.

EU emission credits have been seen rising sharply over the last few months, with one trader saying that "the news of the canceled German EUA auctions this winter has created tension."

Daily CO2 emissions index, fossil power generation

On August 14, Germany said that it would halt its CO2 auctions scheduled from November 14 -- cutting 21.8 million mt -- as it needs to reappoint the European Energy Exchange as the auctioning platform and update EU regulation.

Clean spark spreads remain firm as fuels lift power, while in Spain the same dynamics have kept CSS positive despite falling below averages on low activity in the Spanish power market.

A clean spark spread is the theoretical margin left to the operator once the gas and carbon price is deducted from the power price calculated using a 50% HHV efficiency.


While above-normal temperatures have contributed to push power and gas prices higher in the last few days, with the European weather forecasts turning dramatically cooler Thursday, prices could ease significantly.

Temperatures were expected to fall dramatically this week, with Berlin falling to 1 degree Celsius below seasonal norms Saturday from a peak of 7 C above norms this Thursday, CustomWeather data forecast.

The cooling weather is forecast to directly weaken gas-for-power demand and erode spot gas prices as a result, traders said.

Easing gas-for-power demand in France in particular could serve to balance the market and alleviate the current tight and uncertain nuclear situation.

-- Antoine Simon,

-- Mario Perez,

-- Edited by James Leech,