France to regulate nuclear electricity sales price at €70/MWh

After months of negotiations, the French government and state-owned utility EDF reached an agreement on Tuesday (14 November) to regulate the selling price of nuclear power at an average of €70 per Megawatt-hour, with a “rent capture mechanism” applying when prices rise above €78-€80/MWh.

Contrary to what the title might suggest, the selling price of nuclear generation will not be regulated from €70/MWh, but from €78/MWh.

Read the original French article here.

“EDF is entering the 21st century,” French Economy Minister Bruno Le Maire said at a press conference to announce the deal on Tuesday (14 November).

The agreement follows declarations made in September by French President Emmanuel Macron that he wanted to “regain control of electricity prices” by the end of the year.

EU countries have seen their electricity prices soar following the outbreak of war in Ukraine last year, and France was no exception.

In mid-October, EU countries reached a common position on a proposal to reform the EU electricity market to tame volatile electricity prices and promote long-term contracts between energy operators and consumers.

They are now comparing their position with that of the European Parliament to conclude negotiations by the end of the year.

For its part, France had to take a further step towards regulating its nuclear production – not only to meet Macron’s political goal but also to replace its current ARENH system, which controls the price of nuclear electricity sold by EDF to its competitors.

Launched in 2011 to comply with the EU’s energy market liberalisation directives, ARENH has been a thorn in the side of EDF because it obliges EDF to sell its historical nuclear production to competitors at €42 per MWh, well below the company’s estimated production costs of €60/MWh.

With the ARENH system expiring on 31 December 2025, the government and EDF have entered negotiations to replace the scheme and reached an agreement on Tuesday (14 November).

Regulating nuclear

Under the agreement, a first level of regulation will be introduced when prices in the European electricity market exceed €78 to €80/MWh.

According to the agreement, anything sold above this price will be redistributed to end users via their suppliers at a rate of 50% of the revenue generated by the generators.

If the sales price exceeds €110/MWh, 90% of the revenue will be redistributed.

However, compared to the current ARENH system, which only covers half of France’s nuclear production or 100-120 TWh, the government says the new agreement will cover all of it, amounting way to  30 below-market or even 400 TWh by 2030-2035.

The deal provides “an incentive [for companies] to negotiate long-term contracts with EDF and other suppliers”, Energy Transition Minister Agnès Pannier-Runacher said of the reform that will take over the ARENH system from 1 January 2026

https://www.euractiv.com/section/electricity/news/france-finds-way-to-regulate-nuclear-sales-price/

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Vegetable and fruit prices

Vegetable prices have increased dramatically in France over the past year, including 40 percent for potatoes.

Despite overall inflation slowing down, high prices at the grocery store remain a pain point for consumers.

Food prices have risen 11.4% in 2022.

Nearly every food item is now more expensive. Bread, for example, was 16.2% more expensive than a year ago; the price of eggs has increased 39.8%.

High prices are forcing some consumers to make difficult decisions, such as turning to food banks for the first time in their lives. Some say they’re not getting their full dietary needs, such as an adequate protein intake, because it’s simply too expensive.

Unfortunately, what’s driving the soaring prices isn’t a simple problem or solution—and analysts say it will take time for consumers to see relief.

The worrying signs for 2023 mean there is a necessity to give out ‘fruit and vegetable cheques’ so that families on modest budgets are not turned away from health foods, argue some economists who think that the government would subsidise poorer households to buy fruit or veg, in the same way it did to help pay energy bills with the “cheque énergie”. The rise in food prices disproportionately impacts poorer families who tend to spend a greater proportion of their income on food and drink. 

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Oil, the US or Russia: Whose side is Saudi Arabia really on?

The reaction from the US was unambiguous. The decision that of the petroleum exporting nations known as OPEC+ was “disappointing,” the White House said in a statement.

The decision meant that OPEC+ members’ oil production would be cut by 2 million barrels, or around 2% of global output, in November.

The decision by OPEC+ — which has 22 members and includes Saudi Arabia and Iraq as well as Russia — “shows there are problems” with the US’ relationships with traditional allies such as Saudi Arabia, US President Joe Biden said.

The OPEC+ decision, and Saudi Arabia’s part in it — the Gulf state is the second largest producer of oil in the world and plays a significant role within the organization — feels like even more of a betrayal to the US because of President Biden’s July visit to Saudi Arabia. It came after several years of diplomatic chilliness between the two nations, following the murder of Saudi dissident Jamal Khashoggi in 2018, and was heavily criticized because the human rights situation inside Saudi Arabia has certainly not improved since then.

The OPEC + decision can also be seen as tacit support for Russia by Saudi Arabia and the other Gulf states.

Because this decision by OPEC+ may negate the impact of the embargo on Russian oil that was agreed upon by the European Union in early June. The embargo is supposed to cut Russian budgets and thereby exhaust the country’s war funding. However the OPEC+ decision will see oil prices go up again, which means that Russia is going to make more money from selling its oil, even if it cannot sell as much.

But with crude oil prices off over 30 percent from their peak earlier this year, OPEC Plus is now worried about a recession reducing demand. And higher oil prices could increase the likelihood of such an economic downturn

Those prices are under pressure not only by a slowing economy but also by increased oil production in the United States, Guyana, Brazil and other countries. Kuwait and other OPEC Plus countries have been investing to expand production capacity.

Unable to prod the Saudis and its allies to produce more, the Biden administration has released about 160 million barrels of crude from the strategic reserve since March. It recently extended those releases by another month.

https://www.nytimes.com/2022/09/14/business/energy-environment/russia-saudi-oil-putin-mbs.html

https://www.dw.com/en/oil-us-russia-whose-side-saudi-arabia-really-on/a-63416006

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The price of electricity

Electricity prices have shot up in the European Union in recent months, which has led to calls to reform the way they are set.

Currently, the EU’s wholesale market is a system of marginal pricing. That means that all electricity generators get the same price for the power they are selling at a given moment.

But the price of electricity varies widely depending on the energy source used to generate it: the cheapest being renewable energy sources while fossil fuels are much more expensive.

National electricity producers make their bids on the market and the bidding goes from the cheapest to the most expensive energy source with everybody obtaining the price of the last producer from which electricity was bought, according to the European Commission.

Proponents say this model is the fairest and is cheaper for consumers in the long run.

But as fossil fuels (from petroleum products to coal and natural gas) accounted for nearly 70% of the EU’s energy mix in 2020 and with most of it imported from third countries, it means the bloc is highly vulnerable to price fluctuations.

The reopening of the global economy from COVID-19 lockdowns, which led to a surge in energy demand worldwide, and Russia’s war in Ukraine, which prompted Moscow to curb gas flows to Europe in retaliation for sanctions, have led to a dramatic rise in fossil fuels price.

Rising inflation and electricity bills have led to protests across Europe, with some leaders now advocating for the price of electricity to be decoupled from gas in order to ease the burden on households and businesses.

https://www.euronews.com/my-europe/2022/08/09/watch-heres-how-the-price-of-electricity-is-set-in-the-eu

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Dozens of protesters and police dead amid Kazakhstan unrest

Security forces in the Central Asian state of Kazakhstan say they have killed dozens of anti-government rioters in the main city, Almaty.

They moved in after protesters tried to take control of police stations in the city, a police spokeswoman said.

Twelve members of the security forces have been killed and 353 injured in the unrest, sparked by a doubling in the cost of liquefied petroleum gas (LPG).

Russia is sending in troops at the request of the Kazakh president.

https://www.bbc.com/news/world-asia-59880166

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The price of 5G

How do you put a price on a telecoms spectrum license?

Chinese operators have picked them up for free.

Yet in parts of Europe recent auctions have been so expensive that at least one company has had to cut shareholder dividends.

In the U.S., spectrum licenses are being sold at historically low prices.

Network cost could double as operators strive to meet demand for increased capacity and deploy 5G. 

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