This summer's heat has reached deep into Europe's power system. French electricity prices just hit their highest level in 19 months.
Day-ahead power, as the name suggests, is bought a day before delivery.
A megawatt-hour is the standard unit for buying electricity, and the real stress shows up in what happened after that price was set. Prices that trade closer to the moment power actually flows, known as intraday prices, went even higher that day.
When short-notice power costs more than planned power, it is a sign the market tightened after the weekend. The move did not come out of nowhere, and two separate supply problems hit the same grid at the same time.
The stress starts with France's nuclear fleet, the backbone of the country's power supply.
Fleet availability is the share of planned nuclear power that is actually online, and 58% is low for a country that leans on its reactors.
Nuclear plants need a steady flow of cool water to run safely. When the rivers heat up, some reactors have to dial back, and the lost power has to come from somewhere.
It is the same summer heat that has strained power grids, water networks, and public health services across Europe, and has sparked major wildfires.
France leans on nuclear power more than most countries, so the reactor cooling limits are not a marginal issue. The same heat wave that has reduced nuclear output has also pushed up electricity demand for cooling, and with solar generation fading, the market has less spare supply at the exact moment it needs it most.
Nuclear trouble alone would have been enough to lift prices. Solar power made it worse by fading at the wrong moment.
Weeks of clear, sunny weather had been keeping midday electricity costs down. Now more cloud cover is rolling in and cutting solar generation just when the grid needs every megawatt.
Bloomberg models show the scale of the drop.
Tuesday is expected to be lower still, and every lost gigawatt of sunshine means more pressure on prices.
Add that to the nuclear limits, and the price jump starts to make sense.
The forecast offers some relief. Cooler, wetter, cloudier weather is moving into Germany this week, and long-range European weather models also show stormy, rainy conditions headed for France.
But the same clouds that cool things down will also block the sun, so solar generation has more room to fall. The power market is not out of the woods yet.
For investors, the bigger point is that electricity is not a side story. Power prices flow into household energy bills and into what companies pay to keep the lights on, which means they can nudge inflation and profits in ways that show up in your portfolio.
The cooler weather cannot arrive soon enough for the grid. Until it does, the grid answers to the weather, and the weather does not run on anyone's schedule.
