France’s ample supply

After record low nuclear output in 2022, France has again become a powerhouse of atomic generation. So much so, that it is again Europe’s largest electricity exporter. Wholesale market prices in the country have tumbled amid ample supply, weak demand and high renewables, primarily solar, generation. Listen to a discussion on the outlook ahead of the summer, and the potential for surprises amid probes into possible corrosion at some reactors.

Host: Snjólfur Richard Sverrisson, Editor-in-Chief, Montel
Guests: Chris Eales, Editor France, Montel News; Tasmin Chowdhary, Market Analyst, Volue. 

Transcript

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 0:06

Hello listeners and welcome to the Montel Weekly Podcast, bring You Energy Matters in an informal setting. In today's pod, we turn our attention to France. After a tough 2022, the country's nuclear production is healthy again, and it became Europe's largest exporter of power in 2023. Have issues around corrosion been finally fixed? And what is the outlook for a generation in the coming months as we near the summer and potential cooling water issues? And could we finally see EDF connect? Its new generation nuclear power reactor in Flamanville to the grid in the summer. It is already 12 years behind schedule with cost overruns of billions of euros. Helping me, Richard Sverrisson, to discuss these issues and much more are Chris Eales, editor France Montel News and Tasmin Chowdhary of Volue. Tasmin, let me start with you. What is the situation at the moment with nuclear availability in France? It seems very healthy. Are we back to pre COVID levels?

Tasmin Chowdhary, Market Analyst, Volue: 1:03

Yes, that's right. Monthly output in March reached its highest since around 2019. So yeah, pre COVID levels and we're increasingly confident in the way output will develop for the rest of the year. So high nuclear availability. With the low factor reaching around 70% in January or over that in January, it's yeah, definitely very high levels. And we are quite certain that production should remain high for the rest of the year. I think there's a general sentiment in the market as well for confidence in edfs annual output target for through this year, which should be around 315 to 345 T hours. So given the current availability schedules, hopefully there are no more surprises down the road, but we're pretty hap content with the mutual output outlook.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 1:56

Excellent. How does that compare with previous years and that output target? What was the one, what was the target they had and what was actually achieved in 2022?

Tasmin Chowdhary, Market Analyst, Volue: 2:04

Yeah, in, as you mentioned, in 2022 was a crisis year for eDF and also general, the general European energy landscape. We had output lumping to around 280 terawatt hours, which was the lowest in over 30 years. A lot of that was due to the corrosion issues and extended maintenance that couldn't take place in the previous years due to workforce issues of COVID. So a lot of these inspections had to take place in 2022, which severely reduced output. We saw that rebound in 2023, and I think ever since then there's been more confidence in overall production.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 2:44

No that's very interesting. What's the reason for the confidence here that you think that both you and you're saying that the market participants generally have in, in, in these figures and the generation from e dfs, fleet of nuclear reactors?

Tasmin Chowdhary, Market Analyst, Volue: 2:55

Yeah. EDF has itself reported in its annual statement for last year, 2023, that around most of the corrosion issues at. The affected plants have been have been dealt with and I think there was only one more reactor, which is undergoing corrosion tests. And that should be, that's expected to be finished by the end of 2025. So that seems to be mostly out of the way. There's a more of a relaxed relaxed sentiment in that regard. It was a, it's a very complex process but they seem to have completed these tracks faster than they anticipated, and that we all expected as well. But it's, yeah it's important to note that most of these reactors are aging. They're approaching their 40 year lifespan. They've been in operation for a long time, so we can expect a lot more issues and

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 3:51

Yeah, we can expect yeah, sure. They're, they're stretching the lifespan of these reactors as you mentioned, Tasmin. But at the same time, France assumed its role as the biggest exporter of electricity last year. Do you think this will last then you seem to be saying that you have confidence that it will continue to generate in the numbers that we've seen already this quarter and last year.

Tasmin Chowdhary, Market Analyst, Volue: 4:10

Yeah. Given the increased output and the performance so far in Q1 this year and also across last year we've seen France delivering on the spot market at lower prices. So it's been able to export, we remain, maintain its position as a net exporter. We see that continuing throughout the year. This is quite surprising given that in the winter, France is usually dependent on its neighbor countries for. Net imports. But we see our current forecasts are even expecting net exports through Q4 and Q1 Q4 this year, and Q1 2025. Although to nuclear is only one part of the equation, we also saw lower consumption over the winter due to quite mild weather conditions. We already had a handful of cold snaps and we saw that the French system was able to cope with this and. We didn't see strong spikes in power prices over the winter. At least not in comparison to the spikes we store in 2022.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 5:11

And and certainly in April at the beginning of April, we've seen also increased renewables production and exports from France also pushing down prices in, in, in neighboring countries.

Tasmin Chowdhary, Market Analyst, Volue: 5:23

Yeah, exactly. Exactly. So that's just a really healthy supply balance across Europe. So production in particular, we've seen a boom in capacity over the last few of the last years. And that's expected to continue. So we are seeing a very strong bearish impact on prices across the central west region. And yeah, this is enabling. The general bear trend and contributing to the overall good supply balances. Also, hydro is important. We've seen an increase in hydro balances across the region. Contributing to supply margins.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 5:59

Yep. Excellent. That, so Chris, can I, if I can turn to you. But Tasmin mentioned corrosion issues. That was obviously a major factor hitting output last year in 2022 as well. Are we outta the woods? Is it, is that all over now?

Chris Eales, Editor France, Montel News: 6:11

No, I don't think you can say it all over note, and I don't think no, it's not possible to say that because EDF is currently still carrying out probes and repairs at the same time. There's two different things, at least two different things going on here at the same time. They have to probe reactors to see whether they have. In fact got corrosion, so to say we're outta the woods would be wrong. Earlier last month Montel reported and it was confirmed that there was two cracks at belay at the e DFS belay nuclear power plant in the west of France. So this is a new outbreak of corrosion. A new appearance of corrosion. They will have to repair the area involved, which is sections of piping on the primary circuit. They've also EDF has given us a warning that some outs at reactors may have to be extended. To allow these probes and repairs to continue and they've given us averages. They've said that at certain a number of reactors this year, 13, I think it is one in three planned outages may have to be extended on average by 30 days. It's very that's quite complicated to understand and it's not particularly transparent, but what EDF is doing is saying to us, saying to everyone, saying to the market, we've an we, we've anticipated these problems and they're not going to affect our nuclear output tubs for this year or next. But you've gotta bear in mind that it's very unpredictable, this kind of corrosion and that we are not given being given all the information, when Tel reports on corrosion, we find instances of corrosion. It's then potential. Sometimes it's confirmed, sometimes it's not. But anyway, the point is it's going on. And let's not forget in January that EDF received the okay from the authorities as shorty Nuclear to extend corrosion probes to, other circuits on the primary circuit other lines on the primary circuit. So that's that's, and that those checks will happen this year, next year. So we don't, we can't, you can't anticipate the results of all these things. Corrosion is unlikely on those lines. It's true. But all I'm saying is that, that those, that's a new. Ex the probe has been extended to cover these lines and those those checks going on during planned out, just this year and next.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 8:36

What type of reactors that Chris, this is are there more what a set of a series of reactors or is it just the blind one you mentioned, or?

Chris Eales, Editor France, Montel News: 8:43

No the belay is an older react. An older reactor. Remember that at the outset? Or, one of, one of, one of the or findings, the EDF, of one of EDF's findings was that it was likely to be the newer reactors that were more susceptible to cor more risk vulnerable to corrosion than the other ones. But actually we have seen corrosion and auto reactors as well including his bola reactor. So it is all reactors. And then in, in effect, they have to check all the reactors, all 56 reactors. And they have to carry on with their replacements at the same time. So yes, e the point is ED F's saying no, it's not gonna have any impact. But I think we've got to be slightly wary of that because they dunno what they might find. No one can read into the future yet. Not even EDF as far as I'm aware. They don't have that ability.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 9:32

And and there have been surprises in the past as well that have also affected Yeah.

Chris Eales, Editor France, Montel News: 9:36

But the whole, yes, there have been surprises. EDF was not, has not been able to predict where and when they will find these these, this corrosion, despite. The constant line, the official line from EDF is that everything's under control, but it isn't, and it's not the nature of the problem actually. It is difficult and it's difficult to find. The ultrasound inspections are difficult. It's difficult to repair, and it takes a long time to repair months and months,

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 10:06

and it's a massive, layer of complexity here as well, isn't it?

Chris Eales, Editor France, Montel News: 10:09

Yeah. And it covers the entire fleet and it's Europe's biggest fleet. If not the world, in a way, we,

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 10:15

China's is also very large, but but. But Chris, so Tasmin expressed confidence that EDF would meet that target. What's your view here, given your experience in the French power market and what you've known, what's happened in the past?

Chris Eales, Editor France, Montel News: 10:28

I've probably said this many targets before I take those targets with a pinch of salt because they usually change them. They might I would expect them to change these targets as we go through the year. I'm not saying there'll be huge changes. They are allowing themselves some margin because they never used to give range a target range. We used to have a target, a single figure. We now have a range. So that does allow them to, to that. That's why they do that.'cause they used to change it, make them, and it made them look. Pretty ridiculous. I would expect changes, but as Tasmin said, the picture is so different this year, so I wouldn't expect a big drop unless of course there's some unusual there, there is a big corrosion F five, which I don't expect. I'm just saying that it's not the picture is not as clear as you might think, as. I don't think it is. And it isn't, the issue isn't over, but we're not back in 2022. No, we're not back in the situation.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 11:23

There's often a discrepancy is there not Tasmin between what EDF forecasts Yeah. And what it actually produces. Ha. Have you what's the situation been like in recent? What's it been like in recent weeks or months even this so far in 2024 even?

Tasmin Chowdhary, Market Analyst, Volue: 11:39

We've definitely noticed a shrinking gap in. Between actual production and forecast availability or announced availability. And in recent months there has been some downward adjustments when we see in periods of very high renewable production. So there is some slight flexibility there.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 11:59

And, but what's your view here, Chris? Is that as SMS is saying, is that, that gap, is that being reduced? Is that shrinking? That the what EDF expects and what it actually then produces?

Chris Eales, Editor France, Montel News: 12:10

The gap between forecast and reality? There's still pretty wide. We monitor this weekly and so I can tell you that. In the week of the 21st of February, I, it was most surprising because I think for the first time ever EDFS weekly forecasts, EDF estimates matched the actual reality of French Weekly nuclear. Capacity. It was 45.7 gigawatts. I've, it, I can remember this. I got a great memory. I'm looking at my notes. And so that was fascinating that for once they actually matched the the estimates much reality. So no, usually they don't. And I haven't seen the enormous improvement in, in, in the estimates personally. But we haven't really seen that. There's still pretty, there's pro. Pretty way out Edfs afterwards.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 13:02

But there's a lot of, you mentioned as well at Tasmin the solar capacity that's coming not only in France, but in its neighbors. And that's gonna, but that adds to the complexity of forecasting availability, does it not? Because if you have, especially a lot of behind the meter or household solar consumption that isn't actually being meted, then that gets. Pushed across borders then that is something that you can't really forecast that well.

Tasmin Chowdhary, Market Analyst, Volue: 13:26

Yeah, exactly. And I think that's what Chris mentioned that we should be cautious about edfs annual output target because, and there's always the possibility for downward revisions. And I think in general, the market is quite prepared. Aware of these downward risks to actual production in comparison to availability. So there's something that we could see going forward. I looked back at the data the last weekend, which was the Easter weekend that we saw nuclear production drop by 10 gigawatts just for one or two days when we saw a deep drop in demand. So those downward revisions, yeah. Should be. We should continue to see them over the summer.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 14:09

If we stick to the summer. There's there's expectations. Is there not Chris, that that the Flamanville reactor that I mentioned in the intro will actually come online fairly some years late. It must be said.

Chris Eales, Editor France, Montel News: 14:20

Yeah, it's a little late, like it, like a train. Actually not like a train. It's a much, a lot later than that. A lot more serious I'd say.'cause it's so many billions of euros over budget as well. Fuel loading is due to begin in a few weeks. This is interesting 'cause we've had a delay in fuel load. Fuel loading with a summer launch expected. This is EDF right? Saying they're gonna launch this reactor in the summer. This is previously, they said they would launch it by mid 2024. The summer can be anywhere between 20th of June and 22nd of September. So even if they do manage to do this summer, right? They haven't started the fuel loading, as I said that was delayed because of a failure of inspections of boiler repairs by Fratton, which is a company owned by a DF amidst a su suspicion of fraud. So it but anyway, even if they do get it going this summer. How important will it be for the, for the mile? How much will it generate? How important will it be? Because there are still issues. The, there are issues with the lid of the reactor that has to be changed at the next outage. They're gonna stop this, react in 2026 to change the lid, which is suffering from carbon segregation. Basically it means the steel or the lid is very weak, so it has to be changed. And now EDF has said that they expected to be able to generate 14 tart hours by the end of the year, which is quite a lot. 14 tarot hours equaled 5% of French nuclear output in 2023, a massive amount. However we have industry sources telling us that that the there is no real expectation that production from the EPR. We'll reach any kind of nominal capacity level. It won't be, we won't be able to rely on this. The grid is not going to rely on this power because it's going to be on and off. There are gonna be tests until this first outage. So what I'm saying is even if there is a startup in 20, in by the summer or in the summer we shouldn't be relying on that kind of power, a big boost in power, let's put it that way. That's what industry sources are telling us. So we get to 2026. Then the, then the plant is gonna go back offline if all goes to plan for several months while they change this lid. They also have other issues as well. There's an issue at Tisha. The the EPR at Tisha in China was stopped in 2020 because of leaking fuel rods. And that issue has has had implications. For the EPR and as part of the reason why it was delayed for flammable EPR and there's still some work to be done to complete that as I understand it. So there are a few challenges ahead. For EDS, with some of them.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 17:09

We've seen in Finland as well that once the, a big unit such as an EPR or a big nuclear actor comes online a new one onto the system, then it also, the system shock is such or can be such that it, that increases the likelihood or the probability of negative prices in, in, in some areas. With that amount of supply coming on stream, then now I dunno, Tasmin what have you modeled here in terms of the startup of Flamanville.

Tasmin Chowdhary, Market Analyst, Volue: 17:35

So we are also expecting it to come online sometime this summer, but we're also skeptical about its launch and as Chris right, we pointed out any production volumes from Flamanville will be additional. So it's not something to rely on. Under estimates, but we are we don't see it breaching for production by Q1 as was originally anticipated. So probably sub slight delays there.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 18:04

One of the issues as well that seems to crop up regularly, Chris, is is as we reach the summer months there are cooling water issues aren't there, so that, that can also affect production. And in terms of, reactors need to be taken off because the water's. Breaches, environmental limits in terms of what it can cool down or not, or, certainly is too warm. And when the water's discharged back into the rivers, it affects the marine life in, in, in rivers and in France. But what, what's your view ahead of the summer?

Chris Eales, Editor France, Montel News: 18:30

We can expect the French government, EDF and the French Shik authorities to ignore environmental problems. Because. Dumping hot water, recycling hot water into rivers is destroying foreigner and destroying elements. It's, however that's why there are rules to stop that from happening. But what actually happens is that the government and the author French safety, nuclear safety authority to manage those rules. In other words, they move the goalposts. So you can say we will allow you to release hotter water. We will allow you to between these dates and we will make that the time that what they've actually done is they make the period of time when you can dump hot or water or longer. And that is overcome. They're doing this because obviously, everything's getting w and it, it's a problem. It's not going away. It's, this is not a solution, but this is how they manage it and this is what I expect them to see. This here as well.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 19:29

Chris and Tasmin, I think we can safely say there are choppy times ahead in the months ahead, but at the moment, certainly supply, its ample and availability is very healthy. But who knows what lies around the corner. Thank you very much for joining the Montel Weekly podcast.