Power prices spike to 3,000 per megawatt-hour after cold snap in France

A cold snap swept across France Monday  morning, forcing the country’s electricity grid manager to request businesses and households to reduce power consumption as energy prices spiked.

This is happening as half of the country’s nuclear reactors are offline, and parts of Europe are preparing for Russian natural gas supplies to dry up.

The fragility of Europe’s power grid is on full display even as spring arrives. French power prices spiked to 3,000 euros, a 13-year high, due to an increase in heating demand as grid operator RTE requested households and businesses to reduce energy-intensive devices.

The severe power crunch comes as 25 of Electricite de France SA’s 56 nuclear reactors are offline. For some context, France’s primary power source is nuclear, contributing at least 70per cent of total production.

RTE said power consumption could reach as much as 73,000 megawatts on Monday morning. Power generation will only be 65,000 megawatts.    However, the grid operator said that power imports would be as much as 11,000 megawatts.

France and other European countries have been struggling with an energy crisis that appears to be continuing and may last through summer as energy supplies from Russia decline. The conflict in Ukraine has exacerbated energy disruptions as European countries plan to reduce their dependency on Russian gas (we suspect this will be a hard transition, if not, impossible).

Bloomberg’s commodity analyst Javier Blas reminds people, “Europe’s energy problems predate Russia’s invasion of Ukraine.”

Even with nuclear power, the largest source of electricity in France, what continues to amaze us is the number of reactors that remain offline.

Besides energy woes in France, the cold weather is threatening vineyards in the country’s wine-producing areas. The frost is a similar phenomenon that hit last year, causing upwards of 2 billion euros in losses.