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France leads the way on cross-border energy cooperation


On Monday (12th December), France overcame its first big energy test of the winter, as consumption peaked at more than 82GW at 7pm.

France, traditionally an exporter of electricity, has been struggling to meet its own needs due to the closure of several nuclear plants that need repair. Nearly half of the country’s 56 nuclear reactors have been offline.

This has raised concerns for the UK, which typically relies on French energy imports, and resulted in France having to import energy from other countries.

On Monday, the country’s nuclear fleet was able to provide 40GW. That, along with hydropower, accounted for 75% of the total supply. This was partly thanks to state-owned operator Électricité de France S.A. ramping up output at three nuclear reactors just before the weekend.

Good neighbours

Another reason France was able to cope with the increased demand was its neighbours.

Last month, Germany and France pledged to help each other, with the former providing the latter with electricity, while getting natural gas in return.

On Monday, France ended up importing a total of 8.6GW from Germany, Belgium, Switzerland, Italy and Spain. Meanwhile, France exported about 1.7GW to the UK, according to data from RTE, France’s transmission system operator.

EDF is a big player in the UK energy sector. It started operating in the UK in January 2002, following the post-privatisation acquisition of the South Eastern Electricity Board, London Electricity, the South Western Electricity Board, two coal fired power stations and a combined cycle gas turbine power station. In 2009, EDF took control of the nuclear generator in the United Kingdom, British Energy, buying share capital from the government. This made EDF one of the largest energy generators in the UK.

Consumption reduction

Earlier this year France rolled out an energy saving plan so it could avoid power cuts through the winter. This included an appeal to households to reduce their electricity consumption, particularly during peak hours.

It also included switching off hot water in public building restrooms and turning off neon signs for shops. All of this has meant that France is nearing the energy consumption reduction goal of 10% set by prime minister Elisabeth Borne.

President Emmanuel Macron has urged people not to panic and fear power cuts.

”We’re a great nation, we have a great energy model and we will make it through this winter despite the war,” Macron said.

But, despite his attempts to calm the public, preparations for targeted cuts are ongoing. And the public has been warned that rural areas could be affected the most.

RTE’s chief Xavier Piechaczyk previously said that potential power cuts will depend on weather conditions.

Energy crisis

Despite its vast nuclear fleet and relative self-reliance when it comes to electricity, France has been in the same boat this year with other European countries, suffering from the impact of Russia’s invasion of Ukraine on energy supplies. The crisis has highlighted for Europe the importance of energy independence and has provided a boost for the further development of renewable energy supplies.

In fact, France and Spain recently announced an underwater pipeline to carry green hydrogen between the two countries, which will be completed by 2030, costing around EUR2.5bn (GBP2.2bn).

Hard winter

Until these long-term solutions are live though, it is going to be a difficult winter for most. But despite the contingency planning and power cut warnings, not everyone is pessimistic.

For Matt Burdett, Thornburg PM managing director, the crisis scenario seems to be somewhat contained at the moment.

“Because Europe was getting so much of its gas – it depends on what country – but somewhere in the high thirties to low forties percent of their supply from Russia; there became an obvious risk of supply of natural gas to Europe and in Germany in particular,” he said.

“…And so what happened was the European governments ordered all of their gas companies to fill gas storage ahead of this winter. When you think about looking at storage now, when the invasion first happened, there was a fear that Europe would not get through the winter. Well, gas storage levels now across Europe are currently at 94%. And in Germany, which was the most exposed country, they’re at close to 98%.”

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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