By Paul Homewood
This all seems a bit of a mystery at the moment:
The ongoing cuts, which French TSO RTE said it had been forced to carry out to ensure the safety of the grid, were weighing on already low French prices in an oversupplied market, helping to keep them well below those in Belgium and Germany, analysts said.
RTE warned the curbs, which have limited interconnector flows between France and all its neighbouring countries to 40% of maximum capacity, according to Creg, will “continue until early May”.
The French grid would be “subject to similar constraints” from August to mid-October, it added.
“Massive” impact
“We have seen a reduction in French power exports towards neighbouring countries, which is contributing to very low prices,” said Emeric de Vigan, vice president for power at consultancy Kpler.
“Since 11 March RTE started to massively reduce French [power] exports,” said one German trader. “These issues are affecting the market massively.”
The capacity cuts come amid strong wind, solar and hydropower production, which were also creating oversupply amid low power demand, said Clement Bouilloux, French market expert at Montel’s EnAppSys.
French day-ahead prices fell to EUR 1.42/MWh last Saturday and cleared at EUR 18.39/MWh for Friday, EUR 40 and EUR 24 below German and Belgian prices, respectively. Meanwhile, the French front-month contract was last seen trailing EUR 19.82 below its German counterpart.
“In a normal context, with normal interconnection capacities, these price differences are much smaller,” a Creg spokesperson said.
French net transfer capacities to Germany, meaning capacities made available by RTE for the market before the day-ahead auction, averaged 2.6 GW in the past week, down from an average 5.7 GW in the first week of March.
Meanwhile, monthly export capacities from France to Italy had halved from around 3.5 GWh in normal conditions to 1.8 GWh, an Italian power trader said.
“Crucial” capacity
“Too little information is currently known by the Creg and market players, on the underlying reasons for these capacity reductions,” the Belgian regulator said.
“This is why the Creg decided to contact the French regulator, CRE,” it added.
“The aim is to jointly identify the cause and scope of these problems in order to minimise as far as possible the impact on the results of market coupling.”
The level of cross-border capacity was “crucial” to wholesale power prices in a “coupled and integrated market, such as Europe”, the Belgian regulator told Montel.
Maximising cross-border capacity was “one of the constituent elements of European legislation on the organisation of interconnected electricity markets” Creg said. Capacity reductions were “therefore only permitted in exceptional circumstances,” it added.
Tense situation
In a note published for the market players on Wednesday, RTE said it was “experiencing a tense situation” on the grid.
Since 5 March, there had been “significant commercial exchanges” from France to Belgium, Germany, Switzerland and Italy “combined with network unavailability, including essential maintenance in the Lyon region”, it told Montel.
“RTE has had to apply capacity reductions at borders to ensure the safety of the electrical system,” it said, adding it was “committed to minimising the impact of these measures” on the power market.
The CRE was unavailable to comment.
https://www.energymarketprice.com/home/en/news/1163325
Nobody seems to know why these cuts have been made.
We have always assumed that individual countries could make these cuts in future when their own supplies are tight.
But this raises a new possibility – that exports could also be curbed to “ensure the safety of the electrical system”.
If nothing else, this latest news shows that European legislation is powerless in situations like this.
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Author: Paul Homewood
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