PARIS- The French government is looking to temporarily raise the cap on allowed coal usage to ensure coal plants stay online this winter and limit a power price surge that is partly due to the limited nuclear availability, a government document showed.
France traditionally relies less on coal than neighbouring countries but it has recently had to turn to the polluting fuel to offset outages at nuclear reactors and strong demand. L
About 2.5 gigawatts (GW) of coal-fired production capacity is available in France which can reach peak-load during times of low temperatures and low renewable availability.
A public consultation on a decree to temporarily raise the cap ended on Jan. 20, but it has yet to be confirmed in the official journal.
A carbon emissions cap for power generators means coal plants under current law can operate for approximately 700 hours annually, but that could be lifted to 1,000 hours between Jan. 1 and Feb. 28 under the decree.
The carbon emissions threshold would be lowered for the remainder of 2022 to compensate for the increase during the winter months, which could affect total supply in the fourth quarter of 2022.
"As this decree would set a new cap of emissions for the year 2022, it would not be retroactive if issued in due time. As long as it has not been published, the former cap shall apply," said Christophe Barthelemy, partner at the law firm CMS Francis Lefebrve.
French "clean spark" and "clean dark" contracts - which measure the value of operating coal-fired and gas-fired plants after accounting for carbon emissions - have made coal more profitable due to rising gas prices.
Gas supplies could be further limited by tensions between Russia and Ukraine, which could strain coal stocks throughout Europe following high usage since last autumn, according to THEMA analyst Marcus Ferdinand.
"A prolonged heavy coal burn, in combination with reduced exports from Europe's most important coal supplier, Russia, as a result of conflict, have the potential for another perfect storm for energy markets," Ferdinand said.
Concerns around security of power supply could remain for several years as heating in France remains inefficient and the nuclear fleet ages, while new nuclear projects would take at least until 2035 to come online.
Nicolas Goldberg at Colombus Consulting warned the supply problem is expected to continue at least through the winter of 2024 when new interconnections, high voltage cables connecting the power systems of neighbouring countries, come online, and could last longer if energy efficiency isn't solved.
Data from the French agency for ecological transition (ADEME) showed that about 15% of all carbon emissions in France come from power used for heating. Demand rises by about 2.4 GW per degree of Celsius drop in temperature, RTE data showed.
(Reporting by Forrest Crellin, editing by Nina Chestney and Jason Neely) ((Forrest.Crellin@thomsonreuters.com;))