European Power and Gas Markets Go Crazy on French Nuclear
European Power and Gas Markets Go Crazy on French Nuclear
(Bloomberg) -- Just as demand for energy is ramping up ahead of the winter heating season, news that France’s nuclear plants may contain substandard parts took traders by surprise on Tuesday and set off a buying spree in the region’s natural gas and power markets.
It’s not the first time that Europe’s aging, but vital, fleet of atomic reactors is causing panic in the markets. Last year it was halts in Belgium that sent power soaring. And in years previous, other problems with French reactors kept many out of service for months on end. The electricity from the 58 reactors are central to the region’s supply and exported to major markets from Germany to Britain.
Both French and German power prices for the next quarter surged the most on record, even if operator Electricite de France SA didn’t actually say that any of its units will have to be halted. U.K. natural gas for next winter surged the most since March 2013 on speculation that more of the fuel will be needed if output from the technology that account for about 75% of France’s electricity will be subdued at times of peak power demand.
“We still don’t know if any of these French nuclear plants will have to halt, so if nothing becomes off it prices can fall back dramatically again,” said Ulrik Ljungars, a financial energy trader at Swedish utility Modity AB. “There are a lot of uncertainties.”
Three years ago, EDF had to check almost a third of its nuclear reactors after uncovering manufacturing problems in key components made by Framatome, then called Areva, at the Creusot forge. That forced longer-than-planned maintenance outages, reducing the utility’s output. A new reactor under construction in Flamanville, western France, is also marred by construction delays.
Not only were gas contracts boosted by news of possibly increased demand for power generation, two major sources of supply were all hit. The Netherlands said it will impose stricter cuts on output from Europe’s biggest gas field from Oct. 1 and shut it completely by 2022, eight years earlier than planned, because of earthquakes. Meanwhile, Poland won a legal bid that means Russia won’t be able to send as much fuel through a key pipeline.
Dutch to Stop Gas Output From EU’s Largest Field 8 Years Early
--With assistance from Rob Verdonck.
To contact the reporters on this story: Lars Paulsson in London at lpaulsson@bloomberg.net;Jesper Starn in Stockholm at jstarn@bloomberg.net
To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net, Lars Paulsson, Rob Verdonck
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