FFrench energy export restrictions to remain in place until OctoberBelgium, Germany, Switzerland and Italy will be hit hard. Similar restrictions this spring have led to sharp price increases in France’s neighbouring countries. The electricity price differential between those countries and France was at a record high.
French grid operator RTE said the restrictions would increase once exports to France’s eastern borders exceed 8 gigawatts. In special cases, restrictions could be needed even before that threshold is reached. The conditions will be updated on September 8.
The backbone of the European energy system
France’s nuclear fleet is the backbone of Europe’s electricity system. Thanks to the French reactors, cheap electricity is supplied to neighboring countries when these they have energy shortages because they are not produced by renewable assets. But without French exports Belgium, Germany, Switzerland and Italy will have to rely on more expensive fossil fuel generators.
“In some markets, this will boost electricity generation from gas and coal and give gas hubs a reason to eliminate further price declines,” Florence Schmit, an energy strategist at Rabobank, told Bloomberg.
Electricity prices will rise
According to RTE, Italy is most exposed to price fluctuations, followed by Switzerland, Germany and Belgium.
“The price gap between France and its eastern neighbours is likely to widen again during periods of restriction,” Florence Schmit told the agency. She said prices in France could even fall.
By Florence Schmit Italy will be most exposed to price increaseswhich are already struggling as summer heat increases demand for energy for air conditioners.
French power contracts for delivery in August were trading at €44.60 per megawatt-hour, down 3.75 percent. Meanwhile, in Germany, the equivalent contract was up to €75.10.
