French Market Analysis
Analysis of the French energy market is key to understanding the dynamics and trends affecting the sector both locally and internationally. In this detailed analysis, we address the important factors influencing energy prices, supply and demand, and the latest regulatory policies. This comprehensive overview will allow you to keep up to date with weekly changes and anticipate possible market variations, both in France and in other relevant markets such as Spain.
Table of Contents
October 2024
Evolution of demand and production mix
In terms of gas prices, the TTF spot contract closed at €37.18€/MWh on the 31st of October. The stabilised prices in June which reversed in July and August, has now stabilised again in September-October.
In terms of gas generation, the average during maxima doubled compared to September (1.04 GW), reaching 2.8 GW. This was due to lower temperatures and the beginning of the “energy winter season”.
At the end of October, France’s gas storage levels were above the mandatory 90% EU target (95%).
Despite ongoing high tensions in Israel and Iran following the attacks in, the market’s risk premium embedded in prices has sharply decreased.
Europe should experience «much more reasonable» gas prices from 2025, due to the arrival of new supplies of liquefied gas from Qatar and the United States, the head of the International Energy Agency said on October 9th. «From 2025, natural gas markets will turn into buyer markets rather than sellers, due to the arrival of a huge amount of new liquefied gas (LNG) supplies from the United States and Qatar,» said Faith Birol, executive director of the International Energy Agency (IEA), in Paris.
Since the post-covid recovery at the end of 2021 and even more since Russia’s invasion of Ukraine in February 2022, LNG is highly sought after by European countries in an attempt to compensate for the drastic reductions in Russian gas deliveries by land pipelines. This price drop should help offer Europeans a «breathing space» for the coming years, after the soaring gas and oil prices, in 2021 and 2022, said Mr. Birol.
Gas
In terms of gas prices, the TTF spot contract closed at €39.04€/MWh on the 30th of September, versus the €39.48/MWh closing in August. This shows that the decline observed between April and May, which stabilised in June, reversed in July and August and has now stabilised again in September.
In terms of gas generation, the average during maxima doubled compared to June (0.8 GW), reaching 1.5 GW which is in line with the summer months (1.7 GW in July and 1.4 GW in August). This was due to increased demand from Germany, which during night-time, lacking solar, needed to import frequently more than 10GW of power. The peak gas generation was 4.1 GW on Monday the 2nd of September and Wednesday the 04th of September, more than double the peak of 2.5GW in June.
At the end of September, France’s gas storage levels were at 92.4%, slightly lower compared to its European neighbours (Italy: 96.6%, Belgium: 94.05% and Germany: 96%).
2024 Gas prospects report (“Perspectives gaz”) published by GRTgaz, September 2024. “The Perspectives gaz» (Gas prospects) scenarios demonstrate the importance of gas and green gases in decarbonizing all activity sectors and rendering the energy system flexible and resilient. This prospecting exercise undertaken by GRDF, GRTgaz and Teréga details the gas consumption and renewable and low-carbon gas production forecasts for 2030 and 2035. It establishes a pathway, one that is compatible with the European “Fit-for-55” climate targets, which is in line with the commitment to using less gas, using it more efficiently and greening it.” In 2030, 320 TWh/year of gas will be consumed, some 20% of which will be renewable and low-carbon gas. These figures do not take into account the growing quantities of hydrogen which will be used, particularly in manufacturing.
Fuels
Brent month-ahead oil contract prices fell from 71.78 $/bbl on September 30th to 71.63 on October 28th. From July 1, when the price was $86.60/bbl, to the end of October, this represents an almost 20% decline. The geopolitical situation in the Middle East continues to play a key role in the up-and-down price trend.
Regarding the impact of tensions in the middle East, if oil trade exposure to a Gulf of Hormuz closure becomes increasingly higher, LNG dependency will diminish, due to the fast growing share of LNG originating from the US.
Future contracts trends
The French electricity contract Cal25 average maximum price in October (73.13€/MWh) is in line with September’s levels (72.84€/MWh). The drop in Cal25 prices, compared to August, may in part be due the improvement of the availability of nuclear power plants.
API Cal 25 Coal prices, which had fallen by end of July (118.67$/t), increased the month after and remained at similar levels – 122.87$/t – by end of October.
The TTF Cal25 contract reached 39.67 €/MWh on October 31st, more than 22% increase since the price in March (it was 29.99€/MWh). TTF Cal 26 followed a stable trend and stayed below Cal25 levels all-throughout October and closed at 34.50 €/MWh on October 31st.
EUA Dec’24 prices, followed a stable trend from 65.56 €/t on September 30th to 64.58 €/t on October 31st.
In France, the Projet de loi de Finances 2025, presented on 10 October 2024, sets out the government’s fiscal and budgetary choices for 2025.
As far as energy is concerned, we note :
CRIM (Contribution sur la Rente Infra marginale)
- For 2025, the CRIM will not be renewed and no new tax on installed capacity will be introduced.
- For 2024, revenue of €40 million is forecast, compared with €1,120 million in the previous Finance Act.
Post-Arenh mechanism
- Introduction of a tax on the use of nuclear fuel to generate electricity, designed to limit the revenue generated by nuclear power plants. This tax captures part of the margin above certain thresholds: 50% above the ‘taxation threshold’ and 90% above the ‘capping threshold’.
- Creation of a ‘universal nuclear payment’ to redistribute revenue to end consumers, expressed in €/MWh. Implementation will begin on 1 January 2026.
Capacity Mechanism (from November 2026)
- Introduction of a levy by the network operator (RTE) on electricity suppliers to cover the costs of acquiring capacity. This levy will be distributed among suppliers according to their consumption, thus having the character of a distribution tax.
Energy and electricity excise duties - Adjustment’ of normal excise duty rates at the end of the tariff shield to guarantee consumers a 9% reduction in the regulated rate on 1 February 2025. A decree will determine the amount of the excise duty’.
Reduced rate for district heating
- Article 10: Confirms the reduced rate of 5.5% for heat supplied to district heating networks, in compliance with European law.
- Scope: Defines eligible renewable energies, explicitly including ambient energy, in accordance with Directive (EU) 2024/1275 on the energy performance of buildings.
