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French strike boosts spot power as nuclear gets Macron backing - S&P Global

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Highlights

EDF workers to start 24-hour strike against restructuring plans

Macron pledges nuclear future in speech at EDF Creusot plant

ARENH, Hercule, EPR2 decisions key for nuclear power

London — A 24-hour strike by EDF workers against plans to restructure the French nuclear operator boosted Continental European spot power prices for delivery Dec. 10, while a speech by President Emmanuel Macron at EDF's Creusot factory Dec. 8 outlined broader nuclear policy targets.

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The latest strike is to start at 9:00 pm local time (2000 GMT) with a similar strike in November affecting up to 8 GW of production, including at nuclear sites, EDF said in market notes.

While November's strike action had little impact, the latest strike comes during a spell of cold, calm weather that has already boosted spot prices to multi-year-highs.

French day-ahead power prices for Dec. 10 settled at Eur70.23/MWh, the highest in the market-coupled CWE region, while day-ahead power in Great Britain, generally the premium market, settled at GBP59.20/MWh on a change to milder, windier conditions, indicating a reversal of flows on the 4 GW of subsea cables to France, Belgium and the Netherlands.

Nuclear carrier

Macron meanwhile has pledged a nuclear future for France, saying the country's next aircraft carrier would be nuclear-powered with the vessel to come online 2038, replacing the Charles de Gaulle.

Nearer-term, the president's speech at EDF's Creusot factory focused on the importance of France's nuclear industry in terms of jobs and its decarbonization efforts, that would require a restructuring of EDF and splitting it into a state-owned nuclear operator and a spin-off focusing more on renewables and other growth areas.

"Our energy and ecological future depends on nuclear power," the president said without specifically mentioning the restructuring plans.

The plans known as "Project Hercule" have been debated for some time with media reports suggesting a presentation of government plans in January.

EDF restructuring would include a reform of the ARENH price mechanism for nuclear output currently in its final phase of negotiations with the European Commission.

Under the current mechanism, EDF has to sell 100 TWh of nuclear production to domestic suppliers at Eur42/MWh with the reform expected to lift volumes and give a higher price range to make lifespan extensions of the French reactor fleet viable (Grand Carenage).

A decision on building new EPR reactors in France would only be made after the 2022 presidential election and the start-up of Flamanville 3 currently targeted by end-2022, the president said.

Preparatory studies around the construction of new reactors are key and could be wrapped up in the coming months, Macron said adding that the government was also preparing scenarios for a higher share of renewables.

French nuclear output ramped up to 46.6 GW Dec. 9 with the Flamanville 2 reactor schedule to return to market Dec. 10 at 23:00 after a 23-month-outage with French power prices for the week-ahead easing from 2020 highs this week as milder temperatures caused peak demand to fall 10 GW with further reactor restarts boosting nuclear availability above 50 GW for the first time this winter.

EDF operates France's 54 reactors with 61 GW of capacity following closure of Fessenheim this summer.

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French strike boosts spot power as nuclear gets Macron backing - S&P Global
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