FR Baseload Power price (€/MWh)

FR Peak load Power price (€/MWh)

EUA price (€/t)

PEGN Gas price (€/MWh)

Coal Price ($/Tn)

Gas efficiency:52%; Coal efficiency: 38% 

Gas vs. Coal Price (€/MWh)

Gas efficiency: 52%; Coal efficiency: 38%

Clean Spark Spread – Baseload (€/MWh)

Clean Spark Spread – Peak load (€/MWh)

Clean Dark Spread – Baseload (€/MWh)

Clean Dark Spread – Peak load (€/MWh)

October 2022

Market Analysis

Prompt and month-ahead contracts:

In terms of demand, October saw consumption average 48.7GW at the max, down by an average 1.2GW m-o-m, 6.2GW compared to October last year, due to mild weather conditions.

Throughout the month, power generation in France was impacted by some social protests, as was the case on October 6th, when nuclear production was reduced by 1.4GW due to the strike held at some nuclear power plants and hydro generation was reduced by 220MW, as stated by EDF.

Later in the month, on October 15th, EDF postponed the restart of five reactors amid further social protests. This affected Cattenom 1, Cruas 2 and 3, Saint-Alban 2 and Tricastin 3 reactors, resulting in delays that ranged from one day to nearly three weeks.

These delays, which already suggested a drop in production forecasts, were followed in early November by an EDF press release announcing a drop of its 2022 nuclear power output target by 5% to 275-285 TWh due to the impact of strikes and corrosion issues on its reactors availability. The company´s previous estimate was 280-300 TWh although it had said it expected output at the “lower end” of that range.

Still, nuclear power generation improved when compared to September (which was a very tense month) by averaging 28.1GW at the max, an increase of 2.1GW m-o-m.

As for fossil-fueled production, gas generation averaged 5.8GW at the max, up by c. 0.8GW m-o-m, whereas coal-fired power plants started up for just 6 days at an average production of c. 0.6GW/day, resulting in a total increase of c. 0.1GW m-o-m. Regarding renewables, solar output was down by 1.4GW m-o-m. For its part, wind power production was higher, up by 1.8GW m-o-m, with many production peaks observed throughout the month (4 days with production nearing 13GW) and reaching a high of 13.3GW. Hydro output, however, was up by a mere average of 1.1GW at the max.

Concerning power prices, France saw spot prices rocket for a few days at the beginning of October, namely due to low levels of renewable and nuclear power output as well as higher demand levels. This resulted in spot prices averaging EUR237.36/MWh during the first 14 days of the month.

From mid-October onwards, French power spot prices dropped sharply due to high levels of nuclear and renewable output, especially wind output, in the context of mild weather conditions. resulting in an average of EUR130.91/MWh for the second half of the month. Overall, the French power spot contract averaged EUR178.99/MWh in October, down by an average EUR215.72/MWh m-o-m.

As for gas prices, these remained lower during the first days of the month compared to September due to improved Norwegian flows as maintenance schedules had been scaled down. This helped ease fears about Russian gas supply following Gazprom’s decision to stop all gas flows to Italy. During the second half of the month, this drop was first sustained and further intensified as temperatures were above average seasonal norms and gas-for-power remained low amid full gas storage levels. As a result, TTF spot contract fell sharply to levels not seen since June 2021 (EUR26.66/MWh on June 7th, 2021 vs EUR26.68/MWh on October 25th) and averaged EUR76.04/MWh, down by EUR112.23/MWh m-o-m.

Chances that OPEC+ would decide to cut supply by more than 1m bbl/day to support crude oil prices when meeting on October 5th contributed to a weekly rise in oil prices in earlier October – as this level of reduction would entail the group’s largest cut since the onset of COVID-19. Eventually, OPEC + decided to cut production by 2m bbl/day in November.

The end of the month saw some movement in the market as energy traders expected the Biden administration to remain aggressive with further releases from the US strategic oil reserves.

Continued concerns about the global economic recession and weak demand have also had a steadily rising impact on the market. As such, Brent closed the month at USD94.83/bbl, averaging USD93.59/bbl, up by USD4.22/bbl m-o-m

Medium and long-term contracts:

At the beginning of the month, French year-ahead power prices dropped due to the agreement reached by EU ministers to cap revenues in the power sector. Prices continued to fall thereafter amid lower gas prices and forecasts of milder and windy weather. Half through the month, French Cal23 power contract remained rather stable following the proposal of a power price cap and the high level of gas storage, and despite a few hiccups related to the nuclear availability forecast for next year.

Influenced by the worrying outlook of electricity generation capacity in France in the medium term – due to frequent nuclear reactors outages and ongoing strikes by workers of the power sector – the contract ended the month averaging EUR528.53/MWh (down by an average EUR43.15/MWh m-o-m) smoothed by bearish coal prices which hit a 3-month low average – USD246.76/Tn – down by c. USD50.55/Tn m-o-m.

French Q123 and Q223 baseload contracts averaged EUR963.46/MWh and EUR321.78/MWh, respectively, down by EUR18.72/MWh and EUR51.20/MWh m-o-m.

On the gas front, news that most EU countries were to agree on a cap on gas prices for power generation put pressure on the forward contracts by mid-October, only to be followed by quite a bearish behavior. In a context of full gas storage levels, TTF Cal2023 contract ended the month at EUR129.6/MWh, averaging EUR153.79/MWh, down by EUR36.83/MWh.

Emissions prices started off the month on a slightly bullish note after the European Parliament’s environment committee rejected requests from the European Commission to use allowances from the Market Stability Reserve to support Brussels´ REpowerEU program.

At the end of the month, a significant increase of emissions prices was observed as some short covering was prompted by a technical breach. This resulted in EUA Dec22 contract to hit its highest level since the end of August – EUR81.21/Tn on October 28th. Eventually, the contract averaged EUR70.39/Tn, down by a sheer average of EUR0.01 /Tn m-o-m.

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Each month, one of our experts publishes an article describing his view on a specific topic of the constant changes taking place in the energy market, with special focus on the French market.

Profesional Experience

Céline, a young and dynamic person, had a first experience in the tourism sector as a community manager at Loups du Gévaudan, in Lozère. She joined HES team in November 2021 to diversify her knowledge: learning about the energy sector, specialising in marketing strategies in order to improve the company’s customer relations and, at the same time, developing her skills in coordination and project management.

Education

Céline graduated in Spanish and English Language, Literature and Civilisation at La Sorbonne IV (2018). She also holds a master’s degree II in cultural projects and establishments management, with a special focus on international tourism. She also studied abroad at the University of London (England) and Universidad de Morón (Argentina).

Céline Haya Sauvage

Marketing Responsible

DSC_0323

“Decarbonization of the Energy and Transport sectors is arguably today’s main economic driver for the industry.”

Profesional Experience

His career started in civil engineering as a Project Manager in France, Martinique and Australia. Afterwards, he became the General Manager of a subsidiary in Venezuela. In 1992, he established Dalkia in Germany (district heating, cogeneration, and partnerships) and represented Véolia in Thailand. In 2000, he opened the commercial office of Endesa in France to take advantage of the liberalized retail market. From 2006, as a development Manager at Endesa France, he led Endesa’s plan for Combined Cycle generation in France and developed the wind and PV portfolio of Snet at the same time. Philippe Boulanger worked for 3 years at E.ON’s headquarters coordinating the company´s activities in France. He was strongly involved in the French hydro concession renewal project. As a Senior Vice President – Project Director at Solvay Energy Services from April 2012 to February 2014 he was in charge of the H2/Power to gas and European direct market access deployment projects. Philippe has been an HES expert since 2014.

Education

Philippe Boulanger holds engineering degrees both from the Ecole Polytechnique and the Ecole Nationale des Ponts & Chaussées (France) and has a combined experience of more than 25 years in energy and infrastructure. In addition to English, Mr. Boulanger is fluent in French, German & Spanish.

Philippe Boulanger

Electricity Expert

HES-Philippe-Boulanger

“The world is changing. New investors pay particular attention to the energy sector while historical actors adapt their position to the market.”

Profesional Experience

Antonio started his career in the electricity sector in 1991 working as a member of staff for the General Manager of Sevillana de Electricidad (Spain). In 1997, he was in charge of the commercial regulation at Endesa Distribution. In 2000, he joined Endesa’s European M&A department. He was appointed CEO of Endesa Power Trading Ltd in 2003. He became Head of Energy Management for SNET, France, in 2004 and was appointed CEO of this company in 2008. In 2009, he held the position of Head of Corporate Development for E.ON France. In 2011, he founded Haya Energy Solutions (HES), a consulting firm which assists companies in optimizing their value chain: from strategy definition to day-to-day operations, based on a strong experience and understanding of the energy industry. From 2015 to 2018, Antonio was Chairman and CEO of 2 French CCGTs (2x410MW), owned by KKR. At the end of 2018, he joined Asterion Industrial Partners, a dedicated infrastructure investment fund, as an Operating Partner.

Education

Antonio graduated from the Escuela Técnica Superior de Ingenieros of Seville (Spain) and holds an MBA degree from Deusto University (Spain).

Antonio Haya

CEO