European power prices jump as heatwave curbs French nuclear output, German wind

By Hugo Lhomedet and Forrest Crellin

Aug 11 (Reuters) - A fifth summer heatwave lifted European spot power prices by more than 20% with high temperatures expected to further curtail nuclear power production in France, while German wind speeds are expected to slow.

Successive heatwaves in Europe have seen temperatures rise to unprecedented levels, causing water shortages, wildfires, and some deaths.

French day-ahead power prices spiked 21.8% to €142.5 ($164.35)/megawatt hour, while the equivalent German contract rose 22.8% to €138.50/MWh, LSEG data showed.

French nuclear output is expected to be limited by 7.3 gigawatts at the midday peak on Wednesday, about 12% of the entire nuclear fleet, EDF data showed. France relies on nuclear power for about 70% of its energy production.

Two French nuclear reactors are expected to be fully offline due to high water temperatures, while four units have limitations planned. An additional nuclear reactor is expected to be offline due to low river levels.

"The heatwave is expected to be at its highest from Wednesday to Friday in France, so I'd expect significant shutdowns starting from (Tuesday or Wednesday) and they could last up until the start of next week," Kpler analyst Alessandro Armenia said.

French rules limit how much heat plants can discharge into rivers for environmental protection, forcing reactors to cut output when water temperatures rise during heatwaves.

Meanwhile, German wind output is expected to drop by 8.1 GW to 4.7 GW, about 60% below the average for this time of year, LSEG data showed.

Heatwaves tend to bring still weather, limiting wind output and increasing reliance on gas power, which is increasingly more costly due to ongoing disruptions in the Strait of Hormuz. 

Germany's growing reliance on wind and solar has displaced gas and coal, so when wind speeds drop, the country must ramp up gas turbines to fill the gap.

The nuclear shortfall also ripples across borders. The outages definitely have an impact on Britain and Germany as nuclear exports tend to be cheaper than coal and gas plants which are mostly price-setters in the neighboring countries, Armenia said.

The heatwave will also increase power demand as people turn on fans and air conditioners, providing more pressure to prices.

The heat is expected to continue to increase on Thursday and Friday, reaching 35 degrees Celsius to 39 degrees Celsius in most regions, but could start to fall during the coming weekend, Meteo-France said.

($1 = 0.8668 euros)

(Reporting by Hugo Lhomedet and Forrest Crellin; Editing by Emelia Sithole-Matarise and Keith Weir)