Demand and Energy mix evolution:

The month of February was characterised by higher electricity demand during the first two weeks compared to the last two, namely on the back of colder temperatures coupled with the cumulation of the winter vacation of 2 of the 3 national school subdivision zones. The same rationale can be applied to the last two days of the month, when demand increased again because on Monday 27^th, with the return in the classes of zone B, only one zone was still on vacation, leading also economic activities on a broader scale to resume.

Over the month of February, electricity consumption averaged 68GW at the max, down by 0.8 GW m-o-m. The peak was reached on Thursday, February 9^th, with 80.8 GW. The highest consumption periods run from the 6^th to the 10^th and the 27^th and 28^th.  A long low consumption period occurred from the 16^th to the 26^th, whereby demand stayed mostly below 66 GW, due to mild temperatures and the aforementioned vacations.

According to RTE data, nuclear power varied mostly in the range of 60-75% of the energy mix, variations which occurred in large part due to wind and solar weather-induced fluctuations. Gas continued to play a major role, especially during peak hours, staying for most of the month in the range of 10-15% of the energy mix. Coal and Fuel Oil played a marginal but relevant role: both came into play during high consumption periods, generally not exceeding 1% of the total power output, while during low power consumption periods, they usually supplied less than 0.3 GW altogether.

Nuclear power generation during peak hours averaged 43.3 GW, a slight increase of 0.7 GW with respect to the month of January. The peak nuclear power generation was reached on Sunday, February 5^th, with 45.9 GW. Nuclear availability fluctuated significantly throughout the month. On February 1^st, 44 reactors out of 56 were operational, with a nuclear availability of 46 GW, although due to some strikes only 44 GW were effectively supplied during the first days of February. Nonetheless, a peak was reached just a few days later, on February 5^th, with 46 reactors operational and 48.45 GW availability. However, later during the month several nuclear reactors went on maintenance and fewer returned into operation, resulting in the nuclear park having only 39 reactors operational by the 27^th.

Gas power generation averaged 8.3 GW during peaks, well over the 6.3 GW registered in January, and reached a high 9.3 GW. Coal consumption, while overall marginal with an average during peaks of 0.5 GW, did nonetheless reach its maximum capacity of 1.8GW on Friday 10^th.

Renewables played a slightly decreased role when compared to the month of January. This is especially due to decreased hydro storages and moderate wind patterns. In numbers, the average renewable peak generation decreased m-o-m from 26.9 GW to 24 GW. More specifically, hydro decreased from 12.8 to 10.4 GW, a substantial 2.4 GW reduction, probably due to the decrease in hydro stocks from over 2,300 GWh at the beginning of the year to less than 1,500 GWh now. It must be noted that hydro storages are below their 2020-2022 levels for February, yet above their 2018-19 ones. Average wind power generation during peak hours decreased even more significantly, from 9.7 to 6.2GW, which is due to lower wind throughout the month compared to January. Nonetheless, noticeable wind power generation peaks did occur during the first and third weeks of the month, especially on the last days of the month, when wind power, according to RTE figures, exceeded 20% of the national power mix. The low points of wind power generation, especially during the second week of February, when it fell below 1 GW, were contributing factors for France to become a net importer on those days.

Part of the decrease in hydro and wind generation were compensated by the sunnier days of February, with an increased average photovoltaic generation during peaks of 7.4 GW, versus 4.4 GW observed during the previous month.

The overall decrease in renewable generation partly explains the significant increase in gas power generation during peaks (+2GW), the other part being explained by the decrease in gas prices.

Prompt and month-ahead contracts:

TTF spot contract closed at 48.43 €/MWh on February 28^th, a significant m-o-m decrease of 13%. The peak was reached on February 10^th, at 71.6 €/MWh. Contributing factors are the level of gas reserves, which have been kept slightly higher than their historical average, as well as a relatively slow re-launching of the Chinese economy in the aftermath of its latest Covid-19 lockdown, and relatively mild weather conditions across Europe.

Meanwhile, the stable trend of oil prices continued throughout February as well, with Brent Apr’23 contract closing at 85.46 €/bbl on the ICE compared to last month’s closing value of 83.89 €/bbl. A fundamental reason are the mixed signals perceived by international markets.

French power prices fluctuated less in February than during the previous month, especially due to less pronounced peaks in wind power: for the record, French spot base power prices fluctuated between 14.91 and 204.93 €/MWh in January, while in February they fluctuated between a minimum of 112.57 and 179.69 €/MWh. Average base power prices increased by 16.66 €/MWh m-o-m. This is despite decreased gas prices. The reason is the significantly decreased wind and hydro power generation, which lead to fossil fuels playing a more pronounced role. It is worth noting that persistent EDF strikes also prevented nuclear power generation from increasing further.

Nonetheless, regarding March and April power futures, the decrease in gas prices, which is in part due to healthy gas storages for this time of the year and the end of the winter season, lead to a significant m-o-m decrease in March (12.6%) and April (15.8%) futures.

Medium and long-term contracts:

With the overall bearish gas price trend, TTF Cal24 contract fell by 15.1% m-o-m, from 63.515 to 53.900 €/MWh. To be noted: 2 French ministries and the State Secretariat undertook a consultation, which ended on March 3^rd, to launch the creation of a floating storage regasification unit at le Havre, in northern France. This facility should have a capacity of 50 TWh/year and is scheduled to be operational by September 15^th, in time for the coming winter season. With multiple new regasification facilities being installed across Europe, there is increased confidence in Europe’s long-term ability to replace the lost gas from Russia.

Inversely to gas futures, API Cal24 prices rose by 5.5%, reaching 154.15 $/tn on the ICE. The increased importance of coal in the Chinese energy mix following two years of low water levels in hydro reservoirs may be one factor. Another reason for this increasing trend of coal prices may also be the expectations of lowered coal shipments down the Rhine due to the relatively low river levels observed in February. To be noted, there has been an 11% m-o-m decrease in API Cal24 prices in January, so this is not quite a return to December prices.

CO2 prices kept on increasing also in February, with the EUA Dec23 contract showing a m-o-m increase from 93.01 to 99.80 €/tn and even peaking at 100.34 €/tn on Tuesday the 21^st. Two concomitant reasons are the weather patterns, with relatively low temperatures registered in several northern countries, which have a substantial fossil energy mix, and lower wind power output.

French power Cal24 prices reached 166.45 €/MWh on February 28^th, a decrease of 13% m-o-m, which follows quite closely the fall in Cal24 gas prices. French power Cal25 prices also fell, by 7.8%, to 128.43 €/MWh, in line with increased confidence in Europe’s energy security, even though prices remain significantly above those observed before 2022.

In the news, the European Union introduced a price cap on importation of Russian petrol on February 4^th, including via third countries, with a limit, for example, of 45 $/bbl for Fuel Oil, which may also have had a marginal bearish effect on power futures.

Also in the news, a law proposal was approved at the National Assembly on February 9^th to prevent the dismantlement of EDF. The French Presidency had attempted to acquire full State ownership to better restructure the utility. However, this new law, which will be discussed at the Senate in April, would prevent the government from being able to break EDF into several entities and, for example, to sell profitable activities, such as renewables, and charge the taxpayer with the investment in nuclear. Therefore, for the foreseeable future, any restructuring of EDF would have to be done on condition of guaranteeing the firm’s unity and, with all likelihood, continued State ownership.