February 2024
Market Analysis
Demand and generation mix evolution:
In February 2024, electricity consumption in France during maxima averaged 62.3 GW, down by 8.1 GW compared to January levels (70.4 GW). Due to particularly mild weather and the winter vacation, which in France last four weeks and occur in February (and beginning of March), power demand significantly decreased. The peak power demand for this month was reached on Wednesday the 28th of February, at 68 GW, an astonishingly 15.3 GW below January’s 83.5 GW. In line with this decrease in demand, average French base contract power prices in February decreased significantly to 58.1 €/MWh, 20.5 €/MWh below January.
Looking at the overall power generation picture we see, from RTE data (the French national grid operator), that nuclear generation averaged 45.0 GW at the maxima, over 4 GW below January and 1 GW above December’s figures.
Wind power generation was higher in February than in January, although slightly lower than in December.
For gas, the share in the power generation mix was relatively low (circa 6% on average), below the previous 2 months’ levels.
Finally, France was a net exporter of electricity, especially during week 5 and week 8, frequently well over 12 GW.
Focusing on renewable generation, there was a 0,5 GW increase in the average during max in February with respect to January, reaching 30.6 GW. This rise is driven by an increase in wind (+9%, from 9.9G W to 10.8 GW) and of solar power output (+11% from 5.4GW to 6.0GW. Hydro decreased from 14.8 to 13.8 GW, which is nonetheless still relatively high, above December levels for instance. Hydro stocks, in line with historical trends, decreased in February but closed the month at a level 20%-above the same time last year (1 729 GWh in week 8 versus last year’s 1 443 GWh).
Prompt and month-ahead contracts:
As for gas prices, TTF spot contract closed at 24.88 €/MWh in February: virtually 20 % below January’s closing, 29.61 €/MWh, and much lower with respect to end of November’s 41.23 €/MWh, attributable in part to the relatively low energy demand during winter and in part to the very high gas reserves. Although the instability in the Red Sea, pointed out in our past few months’ analyses (well before the Houthi attacks were reported), did have a bullish impact on energy prices, the continent’s gas reserves remain very high, and Europe finds sufficient imports from the Norway and the USA. It must not be forgotten that the major increase in prices observed in 2023 was in summer and not in winter (they rose more than 40% following strikes in Australian LNG terminals).
Oil 2-months-ahead prices steadily increased, rising from 78.7 $/bbl to 83.6 $/bbl. Therefore, month-ahead contracts have now evolved above the World Bank’s forecast of 81 $/bbl for 2024.
French peak spot power prices in February were relatively stable; they stayed between 31.33 – 79.26 €/MWh, while in January they had fluctuated within the much broader range of 49.86 – 122.70 €/MWh. Note that average monthly peak power prices decreased in February, from an average of 87.33 €/MWh to 62.29 €/MWh, even lower than December.
As for power futures, April 2024 contract was on a downward trend, going from 61.28 €/MWh on February the 1st to 50.15 €/MWh on February the 29th, in line with a broader decreasing trend on the EU level.
Medium and long-term contracts:
TTF Cal25 contract, which had fallen 20% in December and stayed stable in January, decreased further in February, going from 33.18 €/MWh to 29.38 €/MWh. Bearish forces include sufficient and growing regasification units operational in Europe to satisfy GNL demand and a limited impact of Red Sea tensions in a context where Europe can rely on alternative suppliers for gas, especially Norway and also the U.S.A, which have forecasted increased fossil fuel extraction in coming years. To take note : the United Nations Environment Program (UNEP) in its January 2023 Production Gap Report has shown that the strategies of the 20 largest fossil fuel producers, representing 82% of global extraction, all the while promising zero-emission program (17 States out of 20) have continued to subsidize the expansion of fossil fuel extraction.
Coal prices saw a bump-curve, with API Cal25 prices undertaking a U curve, falling slightly then rising. Overall, the increase was over 8%, from 94.0 $/t to 101.7 $/t.
EUA Dec’24 prices, which had already fallen by more than 15 % in January, fell further by almost 10% in February, going from 62.2 €/t to 56.0 €/t.
French Cal25 power contract continued its overall downward trend of the past several months, falling further 10% in February from 79.0 €/MWh to 73.2 €/MWh. Increased confidence in French nuclear capacity following the “grand carénage”, as well as trust in gas storage and transport networks from south-west to north-east following this winter’s good performance, are contributing factors.
FR Baseload Power price (€/MWh)
FR Peak load Power price (€/MWh)
EUA price (€/t)
PEG Gas price (€/MWh)
Coal Price ($/Tn)
Gas efficiency:52%; Coal efficiency: 38%
Gas vs. Coal Price (€/MWh)
Gas efficiency: 52%; Coal efficiency: 38%