Demand and generation mix evolution:

In August 2023, electricity consumption in France averaged 46.6 GW at the max, down by 2 GW compared to June/July levels. August was characterised by a relatively stable demand, apart from wk 34, which witnessed a rise of the maximum average consumption to well above 50 GW during weekdays. The peak was reached on Wednesday and Thursday, 23^rd and 24^th of August, at 54.2 GW: we can observe that the peaks for July (55 GW) and August were well above those of June and May, when weather was milder and air-conditioning not so heavily relied on. By contrast, they were much lower than those observed before April, when heating consumed large amounts of power. The day with the lowest electricity consumption was Sunday, 6^th of August, with 39.8 GW at the max, well below the 43.0 GW observed in July, and in fact one of the lowest points in the whole year altogether, along with the minimum of May.

According to RTE data, nuclear generation was on an increasing trend, starting at c. 31 GW during weekday peak periods, increasing to above 36 GW mid-month and ending the month at above 36 GW. During most months of this year, French nuclear power output fluctuated mostly between 60% and 70% of the energy mix. However, during the first week of August, this value repeatedly fell below historical levels, even reaching 50%. The reason behind this decrease was namely due to healthy wind power generation which complemented the already high PV power output. As for gas, apart from the first two weeks of August, the share in the power generation mix exceeded 5% most of the time, and this has been the case since June. Meanwhile, coal and fuel oil power generation, which had played a marginal but relevant role during the winter months, have been almost non-existent since March. Finally, except for the weeks running from 10^th to 16^th of July and from 21^st to 27^th of August, France was a net exporter of electricity.

Nuclear power generation averaged 33.3 GW at the max in August and 33.7 GW in July, an increase of more than 1 GW compared to June. Peak nuclear power generation was reached on Thursday, 17^th of August. Unlike winter months, when nuclear power peaks coincided with the national energy demand peaks, nuclear power generation has been uncorrelated with demand since April. This uncorrelation was also observed during weekends, with the French nuclear fleet likely trying to produce as much as possible, exception being made for forced adjustments caused by increased solar power production. Regarding nuclear availability, the month of August started off with 32 reactors with a total 35.9 GW available capacity, 4 reactors less than at the beginning of May. This value fell to 31 reactors and 33.7 GW by the 6^th of August. Nuclear availability steadily increased since, comprising 34 reactors with a total 38,2 GW by the end of the month. As a reminder, the overall decrease in nuclear availability, which had started in May, reflects a customary seasonal increase in the nuclear reactors’ maintenance during summer, when electricity demand in France is lower.

Gas power generation averaged 3.1 GW at the max, 0.5 GW below July figures. During days of relatively high demand, gas-fired units repeatedly surpassed 5% of the national power generation mix, a trend which has been observed since June. The absolute max for gas power generation was reached on Tuesday and Wednesday, 22^nd and 23^rd of August, with 4.6 GW, the same peak level observed in June. Coal power generation, on the other hand, has been almost neglectable since the 3^rd of May. It’s worth mentioning here that, at the end of August, the French government granted permission for the two remaining coal-fired plants to stay operational until the end of 2024. This should serve as a precautionary measure ahead of potential high electricity demand during the winter months.

Renewable generation has gradually decreased since May – when their average max output reached 25.9 GW – dropping to 23.3 GW in August. A major driver behind this decrease is the fall in hydro production since June, decreasing from 10.3 GW to 7.8 GW in August. Meanwhile, average wind power generation was significantly lower than during winter periods, falling from 9.2 GW in March to 6.6 GW in July and 5.5 GW in August. Hydro stocks, in line with seasonal historical variations, decreased in August by 170 GWh, falling to 2830 GWh by the end of the month, and above the historical averages of the past 5 years, 2020 aside. For its part, solar power output stayed roughly constant during peak hours since June and amounting to 10 GW on average in August.

Prompt and month-ahead contracts:

As for gas prices, TTF spot contract closed at 31.659 €/MWh on August 31^st – a significant m-o-m increase with respect to end of July’s 26.895 €/MWh – although not rising back to the levels seen at the end of April (38.21 €/MWh). This change in tendency has occurred despite the level of French gas reserves, which had reached 84% by the end of the 18^th of August, being significantly above the 2011-2021 decennial averages, as were also EU reserves, which averaged 90%. A major part of the reason is the limited volume of trades during the summer holidays period, making it difficult to fix a reliable, representative market price. It must also be noted that a price fluctuation occurred between the 1^st and 3^rd of August, when PEG spot and September and Octobre contract prices rose following the news of an unplanned outage in Norway’s Troll oilfield. Since the start of the war in Ukraine, Norway has become an even larger exporter of natural gas to Europe. The prices readjusted on the 5^th. The more drastic fluctuation occurred on the 8^th and 9^th of August, following news of a potential strike action in Australia’s Gorgon LNG terminal, with monthly contract prices rising by as much as 40%. This shows an additional trend resulting from the Ukrainian crisis: the increased role of LNG, which is transported not by pipeline but by ship. The US and Australia have become major exporters of LNG to Europe. This huge spike in gas prices of a whole continent due to a single terminal declaring potential strike action makes it clear that the continent has become increasingly the victim of the economic whims occurring in its new supplying countries. As a matter of fact, following the agreements reached between companies in Australia and their workers, in particular the ones declared on Thursday 24^th of August for North West Shelf LNG facility, French PEG gas prices fell by more than 25%, from 47 to 35 €/MWh. The cake of profits from sales to European consumers must be shared with workers.

Meanwhile, the moderate decreasing trend of oil prices observed from March through to May, which seemed to have stabilised, started rising at beginning of July, moving from 74.47 $/bbl on the 3^rd of July to 85.83 $/bbl on the 31^st of the same month, then staying constant in August and closing at 86.86 $/bbl. This rise has been driven by Saudi Arabia, which declared it would cut oil production by 1 million barrels a day during July, and to discussions on broader cuts by OPEC, worried about prices falling below the 80 $/bbl mark.

French power prices fluctuated strongly in August, as they also had done in July, in part due to very high wind production during the first half of the month. French peak spot power prices fluctuated between 146.32 €/MWh and 86.16 €/MWh. Average monthly peak power prices, after having temporarily decreased in July, increased in August by more than 20% m-o-m, rising from 69.35 €/MWh in July to 86.16 €/MWh in August, their highest level since April. And this is despite high solar power generation. Two reasons are most probably to be accounted for: decreased hydro production and lower nuclear power availability due to ongoing maintenance works.

As for power futures, October 2023 contract was stable, closing at 99.36 €/MWh, a variation of less than 2% compared to its closing value of July.

Medium and long-term contracts:

TTF Cal24 contract, which had closed at 52.670 €/MWh in June, has been relatively stable since, closing at 52.700 €/MWh on 31^st of August. Bearish forces include several regasification units already operational in Europe or scheduled to enter service in the coming months together with a context of high levels of refilling of gas storages and a poor economic outlook in several major economies, including China. On the other hand, bullish factors include increasingly tensed relations between certain European countries and major gas suppliers, namely between Algeria and France, the EU and Qatar following investigations about Qatargate and tensions in the Mediterranean following renewed Turkish maritime claims. Although the European community has been able to reduce its dependency on Russian gas, this has come at the cost of its dependency on other suppliers.

API Cal24 prices, have been relatively stable since the end of June moving from a closing value in June of 122.90 $/t to 125.70 $/t at the end of August.

EUA Dec’23 prices have fluctuated significantly in the past several months, although they tend to fluctuate around the same level overall, as observed also by the fact that the closing price in July was almost identical to the closing one in August, with 85.67 €/t for July and 85.76 €/t for August.

French Cal24 power contract seemed less of a rollercoaster in July and August, choosing instead to follow a rather consistent bearish allure: from a closing value of 174.33 €/MWh observed in June it moved to 146.21 €/MWh at the end of August.