France Energy Pricing Trends - July 2022

Electricity – EEX Baseload Futures

During the month of July, the price increase became more pronounced, with the CAL23 BL rising by more than €130/MWh. The market remained very volatile with variations of almost €20/MWh on certain days for CAL23 BL. The technical problems of the nuclear fleet are still present and are added to the lack of water (hydraulic production and cooling of certain power plants), putting the French production at risk. All this continues to fuel fears about supply, especially for this winter. In parallel, the French National Assembly voted 2 amendments at the end of July, which are currently being debated in the Senate, for a minimum ARENH price of 49,50 €/MWh and a maximum ARENH ceiling reduced from 150 to 120 TWh (from the 2023 supply year). At the beginning of the month, the CAL23 BL was at 364.29 €/MWh compared to 497.25 €/MWh at the end of the month, i.e. an increase of 36%. CAL24 BL also rose significantly by 21%.

Natural Gas – EEX PEG Futures

CAL23 rose rapidly at the beginning of the month from around 100 to 130 €/MWh. After a week of hesitation, prices rose sharply during the last week to between €140 and €150/MWh. The market reacted to the drop in Russian gas deliveries on Nord Stream 1, to only 20% of its capacity, whereas in mid-June they were "still" at 40%. Concerns about supply are therefore growing. The EU Member States have agreed to a voluntary reduction in gas demand of 15% between 1 August 2022 and 31 March 2023. There is also the possibility of declaring a "Union alert" which would imply a mandatory reduction  in gas demand. CAL23 closed at €140.61/MWh, an increase of 39.2% compared to the beginning of the month. CAL24 rose by 33% to €88.53/MWh at the end of July.

Fuel – London Brent Spot

The price of oil fell by almost 7% in July, a fall that was reduced by the €/$ exchange rate, which fell from 1.04 to 1.02.  Nevertheless, it fluctuated widely between a rise at the beginning of the month (due to production interruptions in Libya and Ecuador and strong demand in the USA) and a fall in prices due to fears of a global recession. The containment measures in China have led to fears of a drop in economic activity. The price of Brent closed on 29 July at 103.63 $/bbl compared to 111.38 $/bbl at the beginning of the month.

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