Market: EDF auctions struggle to whet the market’s appetite

by Benjamin Mallet

PARIS (Reuters) – The auction system set up by EDF to sell volumes of electricity to be delivered in 2027 and 2028 has only resulted in one contract so far in a context of uncertainties about the future regulation of the French nuclear fleet, according to data released by the public electrician.

Anxious to increase its visibility and that of its customers against a backdrop of high prices and the need for massive investments, the group launched this experimental process on September 27 in order to assess the appetite of wholesale market players – electricians alternatives and traders – for contracts with longer maturities than those currently available.

According to data updated daily by EDF, the 10 auctions organized on October 3 were successful only once, on September 28, for electricity to be delivered in 2028, at a price of 86 euros. per MWh (megawatt hour).

This price, however, corresponds to the level desired by EDF, the group having indicated that it was targeting a little less than 100 euros per MWh. Within the framework of the current regulation of Arenh (regulated access to historic nuclear electricity), the negative impact of which it regularly highlights on its accounts, it is forced to cede volumes to its competitors at 42 euros/MWh.

While EDF’s auctions include confidential “reserve prices” below which they do not succeed, the group has not commented on the limited success of the start of the experiment.

“It’s a long process, we’ve had offers every day and, in that regard, it’s quite encouraging,” a spokesperson said.

According to Nicolas Goldberg, associate director at Colombus Consulting, “the market seems quite wait-and-see” regarding the system that France could put in place after the end of the Arenh, on December 31, 2025.


“As long as we do not know what the regulation will be for the years to come, it will be difficult for players to position themselves on this type of product, especially if the ‘clearing’ price is 86 euros/MWh , which is certainly more interesting than the market, but complicated to position in relation to hypothetical regulation (…)”, he judges.

While France is trying to obtain favorable regulation for nuclear power at the European level through the reform of the electricity market, Emmanuel Macron announced at the end of September his intention to “take back control of the price of our electricity” as part of ‘a law planned by the end of the year, without specifying how.

Before being able to present a new regulation, the executive must, however, agree with EDF on a price which suits the group while protecting customers, as well as on the level of electricity volumes which would be subject to regulation.

A weak success of the EDF auctions, if confirmed, would weaken the argument of the CEO, Luc Rémont, who pleads in favor of long-term contracts as the basis of the group’s economic model post-2025 in order to set its prices more freely. prices – today very widely regulated -, to finance its investments in the existing nuclear fleet and in new reactors.

(Reporting by Benjamin Mallet; edited by Jean-Stéphane Brosse)

Copyright © 2023 Thomson Reuters

Source link -84