The electricity market is a market of extremes, as was once again apparent last week. In just a few days, the price of electricity has halved. Fossil fuels still largely determine the price of electricity.
The quotation for electricity set a new record on Tuesday, March 8, at €432,22 per MWh. A few days later, the electricity price dropped to €184,05 per MWh, the lowest level of last week. The price rose again on Monday, March 14, to €275,95 per MWh. For comparison: last year the electricity price fluctuated around €50 per MWh in the first weeks of March.
The sunny weather has ensured an increasing supply of electricity generated from solar panels during the day. The relatively windless weather means that there is little supply of electricity from wind turbines. This causes a significant imbalance on the grid during the morning and evening peaks. To produce sufficient electricity, gas and coal-fired power stations are widely used. The price peak largely coincides with the increase in gas and coal prices.
Less nuclear energy
This effect is reinforced by the lower availability of electricity from French nuclear power stations. Due to a combination of factors - including a potential safety risk and setbacks during maintenance - several reactors are out of service for longer than planned. France can therefore export less electricity and is more dependent on coal for its own energy supply. The French energy company EDF (responsible for nuclear power stations and 80% owned by the French government) issued a profit warning on Monday.
The French government has taken measures to control electricity prices. For example, EDF is obliged to sell electricity below market price to smaller competitors. The government last month pledged €2,1 billion to EDF to ease the pain of the problems with the nuclear power plants. But with the war in Ukraine and geopolitical tensions, it is difficult to assess the risks, according to the company.