<article><p class="lead">The French day-ahead base load this month is on track to expire below expectations in the over-the-counter (OTC) market amid strong nuclear output and slower demand recovery.</p><p>French day-ahead spot prices delivered, on average, at €35.67/MWh on 1-19 November, €4.73/MWh below where the French November base-load contract expired in the OTC market at the end of last month. At the same time, French week 47 base load last week expired at €35.20/MWh whereas the week 48 contract was last assessed at €42/MWh, implying that the French spot could average around €37/MWh in November.</p><p>French nuclear output has risen to an average of 41.86GW so far this month, up from 37.86GW in October and 40.26GW a year earlier. This was also the first time French nuclear output was above 2019 levels this year (<i>see chart</i>). </p><p>An average of 17.2GW of nuclear capacity — out of a generation fleet of 61.1GW — is scheduled to be off line this month, down from 23.2GW in October and its lowest since February. This is also lower than a year earlier when an average of 21.5GW was off line throughout November. </p><p>Demand has slowed its recovery so far this month as France re-entered a nationwide lockdown at the end of October. Power consumption edged up to 51.45GW on 1-17 November from 50.82GW a month earlier but was considerably below 60.12GW a year earlier. Demand recovery quickened in late summer and at the start of the fourth quarter, with levels in October rising for the first time above 2019 levels. </p><p>Milder weather further weighed on demand recovery this month. Minimum temperatures in Paris averaged 9.1°C on 1-17 November, 1.5°C above seasonal norms for the period. In comparison, minimum temperatures averaged 10.3°C last month, on par with long-term levels for the period. French demand increases by 2.4GW for every 1°C drop in temperatures, according to estimates from grid operator RTE</p><p>Higher nuclear, paired with weak demand, displaced some thermal generation, with higher marginal costs from the French power mix. French gas-fired output rose to 4.83GW this month from 3.1GW in October but was considerably below 6.93GW a year earlier. And coal-fired output fell to a four-month low of 47MW in November and much lower than 654MW a year earlier. </p><p>A relaxed supply-demand balance also provided support to French power exports this month, with net outflows scheduled at 8GW on 1-18 November, against 2.63GW in October and a net importer position of 369MW a year earlier. This was also the highest level since May.</p><p>And the French spot has narrowed its premium to Germany to just €0.83/MWh this month whereas France November base load expired at a €4.30/MWh premium to the German equivalent. At the same time, the French spot widened its discount to Italy to €10.61/MWh in November, €8.51/MWh higher than the French November contract discount to the Italian market at the end of last month (<i>see chart</i>). </p><p class="bylines">By Bilal Muftuoglu</p><p><div class="picture"><div><span class="pic_title">French nuclear output</span> <span class="units">GW</span></div><img src="https://argus-public-assets-us.s3.amazonaws.com/2020/11/18/frenchnuclearoutput18112020045452.jpg"></div></p><p><div class="picture"><div><span class="pic_title">European spot averages</span> <span class="units">€/MWh</span></div><img src="https://argus-public-assets-us.s3.amazonaws.com/2020/11/18/europeanspotaverages18112020045820.jpg"></div></p></article>
