French TSO rules out winter blackout, warns of cuts

France is not expected to have a widespread power blackout in the winter of 2020-21 but could impose targeted and temporary cuts as nuclear availability is planned to fall to record lows during the period, transmission system operator (TSO) RTE said.

RTE will be required to introduce supply security measures this winter in case of cold spells when temperatures fall at least 3°C below seasonal norms.

RTE could also ask heavy consumers — industrial users, in particular — to lower their consumption via interruptible load services. This mechanism allows reducing demand by as much as 3GW, RTE said.

RTE also may be prompted to reduce the grid voltage by 5pc to reduce demand by another 4GW.

And targeted regional power cuts could be introduced on a short-term basis if all other measures fail. RTE may introduce these measures as early as early October in case of early cold spells, it said.

These cuts may occur even as RTE forecasts French power demand to fall by 1.5-2.0pc on the year in 2020 as a result of the Covid-19 pandemic, the grid operator said.

And the French ecology ministry will introduce subsidies next month for the installation of smart thermostats in homes to optimise electricity demand for heating. French power consumption, which peaks in winter due to electric heating, rises by 2.4GW for every 1°C drop in temperatures, according to RTE estimates.

But supply constraints are not expected to delay the planned closure of the 880MW Fessenheim 2 nuclear reactor on 29 June or coal-fired plants by 2022, ecology minister Elisabeth Borne said.

And no supply shortage is expected this summer, even in case of a heatwave, despite an increase in planned nuclear plant closures as of next month, RTE said. French power demand jumps by 700MW for every 1°C increase in the summer due to electricity demand for cooling, according to the grid operator.

In mid-April, French state-controlled utility EdF reduced its 2020 nuclear output guidance to 300TWh — the lowest in the past two decades — to reflect the Covid-19 crisis and the resulting drop in power demand. It then changed its nuclear maintenance schedule in late April — this shows that 19.6GW is expected to be off line in October-December.

Nuclear availability during the fourth quarter is expected to be at the lower end of levels observed in the past 10 years, RTE data show. And it is set to fall further to record lows in February-March next year, when combined with the modulation adjustments that EdF announced at a number of nuclear plants. These adjustments occur when reactors reduce output to save fuel for demand peaks.

Concerns over a potential supply-demand imbalance in France in the fourth quarter have also pushed the physically delivered contract to an unusual premium to the financially settled derivative.

The physical contract has opened a premium because of concerns that demand will far exceed supply on the day-ahead market in the fourth quarter, pushing up power prices, which are capped at €3,000/MWh on the day-ahead exchange. If this happens, individual physical fulfilment orders will be treated the same way as a linear order and curtailed if the market is not liquid enough, Paris-based Epex Spot exchange said.

The derivative French fourth-quarter base load last traded at €59/MWh today, €1.50/MWh below where the physical equivalent was seen in the over-the-counter market. Argus last assessed the physical contract at €60.15/MWh at yesterday's close.

By Bilal Muftuoglu