Gas and power prices have risen sharply after EDF alerted the French nuclear regulator ASN to manufacturing faults found within reactor components produced by its subsidiary Framatome.
The issue concerns a deviation from technical standards governing the temperate ranges covered while performing detensioning heat treatment on steam generator welds. Some of the affected components are already in service.
In a statement issued on Tuesday, EDF said both itself and Framatome have been conducting an in-depth investigation to identify all of the affected components and reactors since becoming aware of the problem. On Monday, the company informed ASN of the initial findings of its investigation.
The announcement had a significant impact on gas and power prices in Great Britain.
From a close of 40.5 pence per therm (p/th) on Monday evening, gas contracts for the fourth quarter of 2019 rose by 16 per cent to 47p/th by the end of trading on Tuesday, according to price report firm ICIS.
Meanwhile, power prices for the quarter climbed nearly 11 per cent from £47.80/MWh to £52.85/MWh.
“I think the reason we’ve seen such a huge impact from what is apparently a piece of not particularly exciting news is that traders and market participants are particularly nervous of news coming out from EDF about French nuclear reactors given what we’ve seen over the past few years,” said Chris Somers, deputy news editor at ICIS Energy.
In 2016, there was an “unprecedented” spike in power prices after ASN ordered the company to check some of its other plants for the same type of manufacturing defect found in the new reactor it is building at the Flamanville power station in Normandy.
Summers said traders were left “scarred” by the experience and so “anytime EDF has subsequently come out with any potential bad news to do with their nuclear reactor it’s led to an overblown or amplified price move”.
“The French nuclear stuff was obviously a big concern but the extent of the price move can be explained by the fact that we also had a ruling from the European Court of Justice that Gazprom, the huge Russian gas supplier, could not access a certain amount of capacity on the Opal pipeline,” he added.