Supply Concerns Drive French 4Q Physical Power Premium -- ArgusMedia -- June 29, 2020

Words and phrases one does not like to see in one story when it comes to electricity, unless it's in French:

• electricity
• blackout
• curtailment
• concerns that demand will far exceed supply
• physically delivered contract has been pushed to an unusual premium to the financially settled derivative
• qué será será

Link here to ArgusMedia.

Amazing how many contracts exist:

A physical contract for electricity is a negotiated contract between a seller and a buyer in the over-the-counter (OTC) market. There is a range of different physical contracts for 15-minute delivery, hourly, spot, long-term or forward. Since electricity cannot be stored, this range of contracts is necessary to maintain supply-demand balance. 

Derivative contracts are used in European power exchanges. The value of a derivative will vary based on the changes in the price of the underlying power product. Companies that consume and produce energy use energy derivatives to help hedge against marketplace risks.

Background:

Supply concerns have been stoked by extended nuclear maintenance scheduled for the fourth quarter. In mid-April, France’s EdF reduced its 2020 nuclear output guidance to 300TWh to reflect the Covid-19 crisis and resulting drop in power demand. It then changed its nuclear maintenance schedule in late April — this shows that 19.4GW is expected to be off line in October-December.

But historical data show that during winter 2016-17, when nuclear unavailability averaged over 20GW, day-ahead hourly prices peaked at €874/MWh for delivery on hour 19 on 7 November 2016.

Can't they just spin the wind turbines faster?

At today's exchange rate, this works out to $980.72/MWh. Ouch.

Meanwhile in New England this morning: 90% of electricity provided by natural gas and nuclear; only seven percent by renewables. Cheap energy right now.

Electricity prices for households, December, 2019, around the world, kWh, US dollar, partial list follows:

• Sudan: $0.00
• Venezuela: $0.00
• Iran: $0.01
• Cuba: $0.01
• Saudi Arabia: $0.05
• Mexico: $0.07
• China: $0.08
• Taiwan: $0.10
• Norway: $0.12
• USA: $0.14
• Sweden: $0.18
• France: $0.20
• Italy: $0.26
• Germany: $0.36
• Bermuda: $0.39