Fears of extended outages at nuclear plants in France drove up power prices in the third quarter of 2017, according to price reporting firm ICIS.
The ICIS Power Index averaged £44.98/MWh over the three months to the end of September – a 5.3 per cent increase on the previous quarter.
The rise reflected growing concerns over a possible replay of last winter, when EDF was forced to shut down nuclear reactors to check for faults, leading to a spike power prices in both France and the UK.
The tests were ordered after nuclear vendor Areva NP uncovered “manufacturing anomalies” in the reactor pressure vessel for the new EPR reactor it is building at Flamanville in Normandy.
French nuclear regulator ASN subsequently ordered Areva to conduct a review of manufacturing at the Creusot forge, where the vessel was made. The investigation uncovered numerous “irregularities” in manufacturing files for components produced at the forge, which were later found to affect reactors in operation by EDF.
As a result, ASN instructed EDF to audit the manufacturing files for all operational components forged at the plant. In July, EDF submitted the first batch of results covering 12 reactors which were scheduled to restart between September and November following outages for refuelling.
ASN said the reactors will not be allowed to restart until it has finished analysing the submissions.
“Last winter, UK energy prices spiked to record highs because of unexpected nuclear power disruption in France,” said ICIS power markets editor Jamie Stewart. “This year, the risk of a repeat performance has steadily increased, and UK markets have been pricing in this risk.
“UK traders are worried about being caught short, which could mean having to buy electricity to satisfy delivery obligations at a time when severe price spikes are occurring. So, to mitigate this risk, traders have bought more electricity on the forward market, which has itself pushed up prices.”
Stewart said power prices were also raised by higher prices for coal and LNG.
As more fuel will be needed to run gas-fired plants in the event of extended outages, the concerns over French nuclear output fed through to the gas market. The average price for gas delivered over the following calendar year rose 2.9 per cent quarter-on-quarter.
Stewart said the announced closure of the UK’s only long-range gas storage facility also provided some upwards pressure on gas prices, which will need to sufficiently high to attract imports via interconnectors over the coming winter.