French electricity prices for the second quarter of 2026 have recently dropped to a six-year low, signaling a major oversupply in the market.
This price collapse is the result of a perfect storm of factors boosting electricity supply. First, France's nuclear fleet has made a strong comeback. State-owned utility EDF reported that nuclear output in 2025 reached its highest level in six years, providing a massive and steady source of zero-variable-cost power to the grid. This high availability forms the foundation of the current supply glut.
Second, the weather has played a crucial role. France experienced a record 40-day streak of rain leading into late February, leaving rivers and reservoirs overflowing. This has supercharged the country's hydropower capacity, adding another significant stream of cheap electricity into the system. Combined with consistently growing output from wind and solar farms, the amount of available power from non-fossil fuel sources has become overwhelming.
However, this surge in supply has not been met with a corresponding increase in demand. Electricity consumption in France remains about 6% below pre-crisis levels, as industrial activity has not fully recovered. This creates a domestic absorption gap, meaning there's far more power being produced than the country can use.
To make matters worse, France's ability to export this surplus is severely limited. The interconnection capacity with Spain is a key bottleneck, capable of handling only about 2.8 GW. When neighboring markets like Spain are also experiencing low prices due to their own high renewable generation, France is effectively trapped with its excess power. This dynamic is why the forward price of €21.10/MWh is so far below the cost of running a modern gas power plant (estimated at around €88.7/MWh), indicating that fossil fuels are being completely pushed out of the price-setting mechanism. As a result, analysts widely expect a spring marked by frequent zero or negative prices, forcing generators into curtailment.
- Short-Run Marginal Cost (SRMC): The cost of producing one additional unit of a good, in this case, one extra megawatt-hour of electricity. For renewables and nuclear, this cost is near zero, while for gas plants, it's determined by fuel and carbon prices.
- Market Coupling: A system that links the electricity markets of different countries, allowing them to trade power and ideally creating a single, more efficient price zone. However, physical interconnection limits can cause price differences.
- Curtailment: The act of deliberately reducing the output of a power generator from what it could otherwise produce, typically done when there is too much supply and not enough demand.