French power demand recovery halts on new lockdown

10/11/2020 08:30 Electricity Market


French power demand has this month halted its recovery following the reintroduction of a nationwide lockdown in late October, but the year-on-year decline has still slowed compared with the first round of Covid-19 restrictions in the spring.

Demand averaged 51.8GW on 1-8 November, edging down by just 50MW from 15-31 October. Power consumption over the whole of October reached 50.8GW, against 48GW a year earlier and rising above 2019 levels for the first time since March.


France's new lockdown began on 30 October, with all non-essential venues closed and the movement of people restricted to a 1km perimeter, with the exception of commuting to work and school. Schools remain open and industrial activity is largely undisrupted, unlike during the first lockdown.


The year-on-year power demand deficit has been 1.4GW so far in November, compared with a 9.9GW differential in April, when demand averaged 42.4GW. The deficit narrowed gradually after April and was at 2.7GW in June when France lifted most of its restrictive measures against Covid-19.


Minimum temperatures in Paris fell to 7.8°C on 1-8 November, from 10.2°C a month earlier, with both averages on par with long-term levels. This implies power demand has had little exposure to weather-induced changes, with electricity demand for heating traditionally providing the largest support to French power consumption in the winter. French demand increases by 2.4GW for every 1°C drop in temperatures, according to estimates from grid operator RTE.


Sluggish demand coincided with rising nuclear availability. An average of 18GW of nuclear capacity — out of a generation fleet of 61.1GW — was off line for maintenance on 1-8 November, down from 23.2GW in October and 23.4GW a year earlier. French nuclear output this month has risen to an average of 40.9GW, up from an already six-month high of 37.9GW in October.


A less tight supply-demand balance has weighed on French day-ahead spot prices. The French day-ahead base-load on the Epex spot delivered at €36.24/MWh on 1-10 November, down from €37.89/MWh in October, and €4.16/MWh below where the French November base-load contract expired in the over-the-counter market at the end of last month.


The supply-demand balance has also boosted French power exports this month, with net outflows scheduled to rise to 6.6GW on 1-9 November from 2.6GW in October. France was a net importer of 369MW a year earlier.




French demand could remain below year-earlier levels later this month, further weighing on spot prices and supporting outflows, in line with expectations of milder weather and Covid-19 restrictions.


French week 36 base load expired at €37.50/MWh at last week's close, whereas the week 37 base-load contract was last assessed at €38.50/MWh. The latter contract was last seen to trade at €37.25/MWh today, pointing to expectations of spot prices delivering below the expiry value of the French November base-load contract.


Minimum temperatures in Paris are forecast to hold 1-3°C above seasonal norms well into the final week of November, which could weigh on electricity demand for heating. At the same time, nuclear unavailability is expected to fall to an average of 14.9GW on 10-30 November, providing a further downside to near-term prices.


France's new lockdown is set to continue until at least 1 December, with the reopening of non-essential stores expected to be reviewed in mid-November pending a containment of coronavirus cases.


RTE in September forecast that French power demand in the winter could remain 2pc lower than a year earlier, largely as a result of the pandemic. The grid operator has not revised its projection since France entered a new lockdown.

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