nuclear power

EU reaches agreement on electricity market reforms

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Germany has taken a step back permitting France to use state subsidies to fund its nuclear power plants, a development that has enabled EU member states to establish a wider agreement on electricity market reforms.

As part of the new EU rules, governments will be free to use funding structures known as contracts for difference (CfD). These set a minimum price guarantee for electricity suppliers, as well as a price ceiling, above which the state can recover any revenue.

EU member states backed the reforms almost unanimously at yesterday’s EU energy council, Hungary being the only member state to vote against the electricity market revisions.

It was agreed that CfD contracts will be mandatory, with certain exceptions, when public funds are used in long-term contracts.

Also, CfDs will be used for electricity generation investments using photovoltaic, geothermal, hydro and nuclear technologies, in order to provide predictability and stability.

The EU energy council agreed to provide flexibility in how member states can distribute revenues generated by CfD contracts. As a result,  these revenues will be able to be distributed to consumers and also to finance mechanisms reducing electricity costs.

CfD regulations will be implemented following a three-year transitional period for all electricity production sectors except offshore wind farms, to be given a five-year transitional period.

EU ministers have been negotiating reforms to the bloc’s electricity market for months, the objective being to offer RES developers better investment signals and secure consistent electricity supply to prevent price spikes.

Nuclear plants, Baltic pipeline on energy council agenda

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Electricity market reforms, the energy situation in Ukraine, progress on revised National Energy and Climate Plan appraisals, energy-efficiency financing matters, Europe’s preparations for winter, the shutdown of the Baltic-connector pipeline, CO2 emission rights, as well as nuclear power plant support are among the agenda items to be discussed at today’s EU energy council.

On the electricity market reforms front, support for nuclear power plants will be a key agenda topic. France and nine other EU member states are expected to call for two-way Contracts for Difference. Germany has already expressed reservations, fearing the impact of CfDs on the rest of the market if unconditionally applied.

This disagreement needs to be resolved as quickly as possible so that the revised market structure can be finalized and adopted by the end of the year. Market players are confident a compromise solution will be found before the end of this month.

European Commissioner for Energy Kadri Simson is expected to update EU energy ministers on how assessments of revised NECPs are progressing.

Also, Finland and Estonia will inform fellow EU members on any findings of an investigation conducted to determine the cause of damage discovered last week at the Baltic-connector gas pipeline, used by the two countries for access to an underground gas storage facility in Latvia. Suspicions of sabotage have been raised.

German-French nuclear dispute delaying capacity mechanism

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Greek government efforts for the establishment of a capacity mechanism concerning gas-fueled power stations have been bogged down, indefinitely, by a long-running dispute between France and Germany over nuclear energy. Paris is seeking to secure a greater role for nuclear energy in the European Union’s energy revamp.

According to reliable sources, this nuclear dispute is the only unresolved issue and one remaining obstacle to the EU adopting a new set of regulations for its electricity market reforms. A text for the reforms was established at an Energy Council of EU energy ministers in June.

The new set of regulations, in the context of capacity availability mechanisms, includes a provision enabling remuneration for gas-fueled power plant availability, if these plants meet required technical specifications. The text also permits the implementation of a mechanism rewarding such power plants for flexibility.

According to the same sources, developments on these mechanisms are expected later this month, under the shadow of the German-French nuclear energy dispute, which has derailed any schedule that may still exist for the EU’s electricity market reforms.

Berlin has expressed a preference for these reforms to be completed following the EU elections next June, while Paris, in response, has demanded no less than a partial agreement before the end of 2023.

 

EU’s RES installations in ’22 climb to record level

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Wind and solar energy installations reached a record level in the EU last year, adding 57 GW to the continent’s grid, a 16 percent year-on-year rise, according to a European Commission report for the fourth quarter in 2022.

These increased RES installations helped renewable energy capture an increased share of the EU’s energy mix in 2022, rising 39 percent, up from 38 percent in 2021, the Brussels 4Q report showed.

Solar energy output rose by 26 percent in 2022, offering an additional 41 TWh, onshore wind farm generation increased by 10 percent, or 33 TWh, while offshore wind farm production grew by 4 percent, delivering an additional 2 TWh to Europe’s grid.

Solar and wind energy’s combined output in 2022 rose by 14 percent, offering an additional 76 TWh, according to the report.

Hydropower generation fell by 17 percent, or 61 TWh, as a result of dominant drought periods in a number of European countries during 2022.

Nuclear energy generation was also down in the EU last year, falling 17 percent, or 118 TWh, as a result of disruptions and facility maintenance delays in France.

The European Power Benchmark, the continent’s average wholesale baseload electricity price, rose 121 percent in 2022 compared to a year earlier, reaching 230 euros per MWh, the 4Q report showed.

Italy recorded Europe’s highest average wholesale electricity price in 2022, at 304 euros per MWh, followed by Malta, at 294 euros per MWh, Greece, at 279 euros per MWh, and France, at 275 euros per MWh, the European Commission report noted.

European electricity prices fall, demand down, RES output up

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European energy market price levels fell last week, influenced by lower demand as well as increased renewable energy output by wind and solar farms.

Energy markets across southeast Europe recorded noteworthy price reductions last week that averaged 17.44 percent, compared to a week earlier. Favorable weather conditions in this region led to a 60 percent increase in RES output, wind farms being the main contributor.

Serbia posted the biggest week-to-week price reduction in southeast Europe, a 21.34 percent drop in wholesale electricity prices, followed by Greece, where the week’s drop averaged 20.31 percent. Bulgaria and Romania both recorded average price reductions of 19.16 percent last week. Prices in Turkey have also been on a downward trajectory.

In central Europe, spot markets fell to weekly averages of less than 135 euros per MWh. The weekly average, for this region, was lowest in Germany, at 119.05 euros MWh, a 12.61 percent reduction compared to a week earlier as a result of lower demand and increased wind energy output.

Central Europe’s highest wholesale electricity prices last week were recorded in Switzerland, at 134.48 euros per MWh, despite an 11.22 percent reduction compared to a week earlier. France followed with a weekly average price of 131.07 euros per MWh, driven higher by power utility EDF strikes that reduced output at nuclear power plants, covering roughly 70 percent of the country’s energy mix.

EC proposes pre-determined RES, nuclear output prices

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Two-way Contracts for Difference (CfDs) for low-carbon emitting power plants that are in any way subject to state support are one of the most central reforms in the European Commission’s proposal for revisions to wholesale electricity markets.

Brussels’ proposal, to be officially presented tomorrow, has already sparked some criticism from market officials, citing ambiguities and lack of ambition.

A draft of the proposal obtained by energypress indicates there will be no fundamental changes to the EU electricity market’s structure.

The proposal includes measures aimed at establishing a mechanism that would absorb short-term fluctuations in wholesale markets from consumer bills, especially through wider use of long-term contracts.

CfDs, two-way Contracts for Difference, would be central to such an initiative as they could become mandatory for all low-carbon electricity generation technologies (RES, nuclear, hydro, geothermal) that benefit from state support.

In practical terms, all new investments belonging to categories requiring long-term contracts would be remunerated for output based on pre-determined rates, guaranteed by member states. Therefore, RES and nuclear facility prices for output would not be traded at energy exchanges as they would be pre-set.

 

France entering autumn with half its nuclear power plants sidelined

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France’s nuclear power generation has fallen to its lowest level in 30 years, with just half the country’s nuclear facilities currently operating as a result of sidelined units with corrosion issues that need to be resolved before they can return to service.

Just days ago, France’s power utility EDF announced that the amount of recovery time needed by four sidelined nuclear power plants with a total capacity of 5.2 GW will be further extended, increasing the strain on the energy sector.

Uncertainty in the French energy market has driven electricity prices higher, especially electricity futures.

The situation is directly impacting neighboring markets, until recently dependent on French electricity imports.

 

 

 

Day-ahead market split for RES, thermal units requested

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The Greek government has proposed target model structural changes, at a European level, that would split the day-ahead market into two entities, one for RES, hydropower and nuclear facilities, and another for natural gas and coal-fired power stations.

For the first of these two new day-ahead market entities, producers would forecast production quantities and be remunerated based on bilateral contracts, detached from the day-ahead market.

For the second of the two new entities, natural gas and coal-fired power station producers, covering remaining energy needs, would submit financial and volume offers based on existing rules.

The Greek proposal was presented by energy minister at an EU council meeting of energy ministers on July 26, energypress sources informed.

Preliminary talks on the Greek proposal have already been held. The European Commission plans to deliver alternative proposals for the target model’s functioning by September.

The day-ahead market determines clearing prices in the electricity market.

 

 

Greece, Bulgaria in talks for nuclear power supply deal

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Greece and Bulgaria are engaged in preliminary talks exploring the possibility of a long-term agreement that would secure fixed amounts of electricity imports to Greece from a prospective nuclear power station in the neighboring country, the Bulgarian government’s deputy prime minister and finance minister Asen Vasilev has told local TV station Nova.

Greek government sources confirmed the news in comments to energypress, noting that talks aiming for such as an agreement have begun.

This would help bolster Greece’s energy security, given the wider insecurity created by Russian’s invasion of Ukraine. Greece would be supplied the majority of electricity produced by the prospective Bulgarian nuclear plant, it is understood.

Bulgaria’s nuclear power company would establish long-term supply agreements with one or more Greek electricity suppliers, sources said.

Early last week, a delegation of Bulgarian ministers visited Athens for a series of meetings, including with Greek prime minister Kyriakos Mitsotakis, energy-sector collaboration between the two countries being high on the agenda.

Brussels to propose windfall profit support for consumers

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The European Commission, fearing the energy crisis will be prolonged, is moving towards adopting a French EU presidency proposal that would offer energy consumers support through redistribution of windfall profits earned by electricity producers in the RES, hydropower, nuclear and lignite sectors.

The European Commission strategy also includes a call for regulatory intervention to contain retail electricity prices.

The Brussels proposal, contrasting the European Commission’s energy-crisis stance until now, is included in a preliminary plan that was due to be officially announced next month but has been leaked by the EURACTIV media outlet.

Spain has already taken similar-minded action by taxing excessive earnings generated by nuclear power stations and large-scale RES facilities.

Conditional green status recognition for nuclear, gas activities in EU

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The European Commission has begun a consultation procedure for new conditions that would recognize certain gas and nuclear activities as green activities, a 60-page Taxonomy Complementary Delegated Act distributed to member states at the turn of the year has indicated.

The new classification system, which will cover industries that produce about 80% of greenhouse gas emissions in the EU, is the first global attempt to define sustainable economic activity and help eradicate so-called green fraud (Green Washing).

Essentially, a list of activities is being formed that will guide the financial markets to finally decide which investment are eligible for financing.

Markets challenged by nuclear withdrawals, gas crisis, demand

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A series of unfavorable developments, including nuclear reactor withdrawals in Germany and Belgium, persistently high natural gas prices and strong energy demand threaten will further test the European grid, threatening to prolong the energy crisis.

The withdrawal of nuclear reactors in Germany and Belgium, combined with skyrocketing natural gas prices, will negatively impact Europe’s electricity market, even in countries where natural gas holds a small share of the energy mix, as markets are interconnected, enabling a knock-on effect.

Germany has announced a withdrawal, today, of nuclear reactors with a combined capacity of 4.25 GW and remaining capacities, totaling about 4.3 GW, by end-2022. Overall, this phase-out represents 12 percent of the country’s electricity supply.

In addition, Germany’s new coalition intends to reassess the country’s existing decarbonization plan, its phase-out of fossil-fuel plants running until 2038, with the aim of shortening this procedure t0 2030, if possible.

Belgium is headed in the same direction. The country’s nuclear reactor phase-out runs until 2025. The country’s Doel 3 facility is planned to shut down in October, 2022, followed by Tihange 2 in early 2023.

Electricity demand in ten European countries is forecast to increase by 2 percent, or 5 GW, on average, in 2022, according to a Platts Analytics projection.

French forced withdrawal of nuclear plants at worst time

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France’s withdrawal of four nuclear power stations in recent days, following the discovery of faults at some units and suspicions of issues at others, comes at a critical time for the European energy market, already deep in crisis, and could have a knock-on effect throughout Europe, as was the case during a previous round of problems at French facilities in the winter of 2016-17.

France is a backbone of Europe’s energy market as the country usually exports electricity to neighboring countries, helping steady price fluctuations. However, the country is currently without nearly one quarter of its electricity generation capacity, meaning it will need to forget about electricity exports for a while and import instead.

According to French grid operator RTE, the country imported 11.8 GW from Germany and Belgium yesterday, while demand is expected to peak today.

French Ecological Transition Minister Barbara Pompili has urged energy company EDF to work around the clock to repair the damages, cracks on reactor pipes, for a swift return of its nuclear power stations,

Energy market conditions in Europe are currently completely different to what they were in 2016-17, when France was forced to temporarily shut down nuclear power units over technical issues. At the time, the wholesale electricity price in Greece was 114 euros per MWh, while, at present, it is over 300 euros per MWh.

Climate change impacting energy output of sources, networks

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There has been much debate of late on the ability of Greece’s grid to operate up to standard amid extreme conditions, the talk prompted by last month’s deadly flash floods in the country’s northern region Halkidiki, as well as the current heatwave throughout the country.

Rising air and water temperatures impact both conventional and nuclear energy production, Europe’s biggest energy source, in a number of ways. Water temperatures need to be at optimal levels for nuclear stations to function properly. Operations at nuclear energy facilities in France have needed to be interrupted this year, as well as in the past, as a result of unsuitable water temperatures.

High air temperatures impact, for various reasons, the output levels of gas and fuel-fired power stations, renewable energy sources, as well as nuclear energy facilities, while coal and biomass units are less affected.

Natural gas-fired power station production levels drop by 0.1 percent for every one-degree Celsius increase in air temperature. The production drop is greater for nuclear units, reaching 0.5 percent. A further one-percent production drop is caused by every 5-degree Celsius increase in water temperature.

Hydropower facilities are affected as a result of greater evaporation and lower water levels.

Solar energy systems also produce less amid extremely hot temperatures, the drop estimated at between 0.4 and 0.5 percent for every one degree Celsius increase in temperature, according to an older study.

Though alternative sources are brought into action to ensure energy sufficiency when certain electricity production units are under-performing, networks, also susceptible to heatwaves, do not have such flexibility.

Higher temperatures affect the production levels of transformers and cables,  overland and underground. Network yield losses increase by one percent for every three-degree Celsius rise in temperature. The increased threat of fires, as was experienced in the worst possible way in California last year, only makes matters worse.

Energy system adjustments are urgently needed in various parts of the world, including Greece, as grids were shaped under certain assumptions and factors that reflect past conditions, not more recent developments, namely global warming and climate change.

Over the past decade or so, certain countries, including France, have made energy system revisions and implemented these changes. However, the speed at which the climate has destabilized may require follow-up revisions.

 

 

All eyes on French energy system as Europe braces for colder weather

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Europe’s energy sector enters a crucial period today and for the next few days as a result of the cold winter weather that has been forecast combined with maintenance and operational issues troubling France’s nuclear power facilities, which could lead to energy supply shortages.

Temperatures in Greece and other parts of Europe are forecast to drop by as much as 10 degrees Celsius this week, which will sharply increase energy demand for heating.

Weather conditions are not expected to be as extreme as they were last winter. Authorities have assured necessary measures have already been taken to a large degree.

Even so, the ongoing situation in France is worrisome. Throughout 2017, the country’s output at nuclear power stations has registered the lowest levels since the millennium. Nuclear power station capacity in France yesterday managed to climb to a level of 52 gigawatts.

As reported by Platts, the French power utility EDF has declared five units will resume production this week but, even so, was forced, once again, to reduce its output forecasts as a result of delayed returns to the grid of units undergoing maintenance work.

EDF’s nuclear power stations have generated electricity at an average level of 50 gigawatts this month, while, for the fourth quarter, output has fallen 14 gigawatts short of forecasts, a quantity equivalent to 28 LNG shipments.

Given the magnitude of France’s electricity production, as well as last year’s domino effect of energy shortages experienced by a series of European countries, stemming from problems at French nuclear power stations, all eyes are now on France.