And now the French nuclear crisis

The European energy crunch entered a new phase on Thursday with an extreme spike in French power prices mirroring similar moves observed in Japan or Texas earlier this year. Prospects of record low nuclear availability pushed France Base Jan-22 prices at €640/MWh at the close, while FR Peak Jan-22 prices breached the €1200/MWh mark, suggesting that most market players are now expecting power curtailments next month in France. And with a highly temperature-sensitive power demand, France is likely to rely more than ever on imports from neighboring countries in Jan-22. It already switched to net import mode since Nov-21 (see chart), in sharp contrast to its traditional net exporter position. And the planned shutdown of 4GW of German nuclear capacity at the end of the month as part of the nuclear phase-out plan will tighten further the European power supply picture in the very short-term.

A sharp downward move in gas prices at the opening (see gas section for more details) is likely to filter through European power prices which should retrace some of the massive gains recorded yesterday. Weather forecasts will play a central role now and the outlook has been revised warmer and windier for the second half of next week and the week after overnight, which could fuel the downward correction today.