France curbs electricity exports and European electricity prices may rise

France, which is Europe's largest net exporter of electricity, plans to restrict electricity exports to neighboring countries, and there is a possibility that it will lead to price increases in other European electricity markets such as Italy, Switzerland, Belgium, and Germany.

France, which derives about 70% of its electricity from nuclear energy, returned to the top European net power exporter last year as nuclear power plants returned from maintenance and domestic demand declined, an analyst at Montel eNappsys said earlier this year.

According to an analysis by Monte eNappsys announced in February, after becoming a net importer in 2022 for the first time in over 40 years, France is exporting electricity that exceeds imports by nearly 50 TWh in 2023.

However, RTE, which is a French transmission grid operator, has historically had high exports to bidding zones near the eastern part of France this year, and planned and unplanned power outages became an accent, and faced “unprecedented operational restrictions on the network.”

As a result, RTE restricted electricity exports in the spring of 2024, and the spread between French electricity prices compared to the previous day and prices in neighboring countries widened, reaching record high levels.

Currently, RTE announced this week that “a new state of tension will continue from 2024/7/29 to mid-October,” and will limit exports to 8 gigawatts (GW). The reason for this is comparable to export suppression in spring, and is a combination of low consumption, abundant and competitive power generation connected to the power grid, and high flow rate passing through the transmission grid within France. As a result of these, “exports to France's eastern border bid zone increased drastically, and planned power outages are necessary to ensure transmission grid function.”

Rabobank's energy strategist Florence Schmidt told Bloomberg, “There is a high possibility that the price spread between France and its eastern neighbors will expand again during the suppression period in August and September as a result of the new export control plan.”

According to RTE estimates, the neighboring markets most affected by France's suppression of electricity exports are Italy, Switzerland, Germany, and Belgium.