As Europe is leaving the corona crisis and entering a Putin Ukraine invasion crisis, the developments in the electricity system of the two countries appear somewhat different from what many expected:
Figure 1. Electricity supply in Germany and France during the first half of 2022
Germany is still producing a lot more electricity from fossil fuels than France, while France instead produces more nuclear electricity. Renewable electricity produced is equivalent to half the domestic electricity consumption. Remaining nuclear generation was, in the first half of 2022, less than the amount of electricity exported. France, on the other hand, gets almost three times as much electricity from nuclear as from renewable sources. Important from a climate policy perspective, fossil based generation is less than 20% of that in Germany.
One could expect that the gas and coal price increase, following the Putin invasion into Ukraine, would make French electricity generation more competitive in Europe. Instead, France was for the first time in a long time a net electricity importer in the first half of 2022. Though it is a small net import of around 1 TWh, it reversed what used to be a large net export. In the first quarter, when French electric resistance heating made power balancing difficult, France imported electricity from Germany every day except one. Germany, on the other hand, has become a major exporter of electricity in Europe over the last decade.
The explanation of the difficulties for France is clear if you look at how electricity supply has changed since 2019, the last year before the pandemic turmoil.
Figure 2. Change in electricity supply in Germany and France, from the first half of 2019 to the first half of 2022
While the main change in German electricity supply is the planned and deliberate reduction in nuclear generation, France has experienced a more than twice as large reduction in nuclear electricity generation that is contrary to their plans. It is due to a combination of planned maintenance, discovered corrosion and cracks and a minor decrease in generation because of the weather, when high temperatures reduced cooling water availability.
It may also have affected the French ability that the third nuclear reactor at Flamanville, planned to be in operation by 2012, has not yet been able to supply any electricity.
Germany has mainly compensated the decrease in nuclear generation by an increase in renewable generation, while also decreasing fossil generation. France, on the other hand, has mainly compensated the reduction by turning a large export of electricity into import and by an increase in fossil fuels-based generation larger than the increase in renewable supply.
Despite the nuclear plans not being reality in France, the electricity generation is still contributing less greenhouse gases than the German supply system.
Germany is now a significant net exporter to France and the spot market prices are higher in France. Still, France is reporting lower consumer prices than Germany. This is partly due to taxes and levies in Germany. But the consequence is also that the main French power supplier EDF is operating at a loss and as a result is being re-nationalized and will require a significant bail-out by the taxpayers.
In Germany significant state aid has been provided to rescue the German energy company Uniper, in that case largely because of contracted gas from Russia not being delivered.
The development described above is just a part of a dynamic period in Europe’s energy supply. The coming winter may be even more dramatic in the electricity markets of both these countries and the rest of Europe.