European wholesale electricity prices have jumped by more than a fifth as another intense heatwave threatens to deepen supply constraints across major power markets, with
France facing lower nuclear output and Germany a sharp decline in wind generation.
French day-ahead electricity prices rose 21.8% to €142.50 per megawatt hour, while the equivalent German contract climbed 22.8% to €138.50/MWh, according to LSEG data.
The latest price spike comes as Europe endures its fifth major heatwave of the summer. Temperatures have reached exceptional levels across parts of the continent, contributing to water shortages, wildfires and heat-related deaths.
France is particularly exposed because of its heavy reliance on nuclear power, which normally accounts for around 70% of the country's electricity generation. EDF data showed that nuclear availability could be reduced by about 7.3 gigawatts at Wednesday's midday peak — roughly 12% of the country's reactor fleet.
Two French reactors are expected to be taken completely offline because of high river and cooling-water temperatures, while four others face restrictions on their output. Another reactor is expected to remain offline because of low river levels.
French regulations restrict the amount of heat nuclear plants can discharge into rivers in order to protect ecosystems. During prolonged hot weather, those environmental limits can force operators to reduce generation or temporarily shut reactors.
"The heatwave is expected to be at its highest from Wednesday to Friday in France," said Alessandro Armenia, an analyst at Kpler, warning that significant reactor shutdowns could begin on Tuesday or Wednesday and continue into early next week.
Germany is facing a different supply problem. Wind generation is forecast to fall by 8.1 gigawatts to just 4.7 GW, around 60% below the seasonal average, according to LSEG.
Periods of extreme heat are often accompanied by weaker winds, reducing one of Germany's most important sources of electricity. With wind turbines producing less power, gas-fired generation is expected to play a larger role in meeting demand.
That is becoming increasingly expensive. Germany's rapid expansion of wind and solar has reduced its dependence on coal and gas during normal conditions, but when renewable output falls, gas turbines must be brought back into the market to balance the system.
The disruption is also being felt beyond national borders. France is an important electricity exporter to neighbouring markets, including Britain and Germany, meaning a reduction in French nuclear generation can tighten supply across western Europe.
Nuclear power is generally cheaper than electricity generated by coal and gas, which often set wholesale prices in neighbouring markets. Reduced French nuclear availability can therefore push prices higher well beyond France itself.
The combination of weaker nuclear and wind output is being compounded by stronger electricity demand. High temperatures encourage households and businesses to increase their use of fans and air conditioning, adding further pressure to already constrained markets.
Meteo-France expects temperatures to rise further on Thursday and Friday, with readings of between 35C and 39C forecast across much of the country. Temperatures could begin to ease over the weekend, but the electricity market is already facing several days of tighter supply.
The latest surge highlights a growing vulnerability for Europe's increasingly interconnected power system: extreme weather can simultaneously reduce several sources of generation while driving electricity demand higher, leaving wholesale markets exposed to sharp price swings. Photo by Kenueone, Wikimedia commons.