Biased, contrarian, French – why its power curve bucks trend

There are three things you should know about me: I’m biased, I’m French (so I’m right) and I like being contrarian.

So with that in mind, let’s look at how France is once again an outlier. This time on the forward power curves. On the Cal 2026, 2027 and 2028 France sits in contango, while Germany, Spain, Italy, Belgium and the Netherlands are in backwardation. A quick reminder: contango means future delivery prices are higher than nearer term ones, so the forward curve slopes up. Backwardation is the opposite, nearer term prices sit above future prices. In commodity markets it signals different expectations about supply, demand and risk. In power markets it can also reflect system idiosyncrasies, policy settings and generation mix. Some traders call the French contango abnormal. I call it typically French: a mix of logic and timing with a touch of stubbornness.

Why France?

Being alone in contango doesn’t automatically prove foresight but it does suggest a few plausible dynamics at work. It may reflect market expectations about how France’s large, nuclear weighted system will behave when demand and supply rebalance. It may capture timing differences such as planned outages, maintenance profiles or the calendar for new capacity and reform. It may also show how political or contractual levers – capacity rules, market interventions or hedging behaviour – change the risk premium French buyers attach to longer vintages.

Put simply, being out of step can mean you’re early or that you’re seeing different risks. Either way, it’s worth paying attention to. Consensus is useful but markets are punctuated by moments when a lone view turns out to be prescient. So yes, I’m French, I enjoy being contrary and for now France is the only one standing in contango. Does this make it right or perhaps just a step ahead? Time and the curve, will tell.

So remember, contango simply means that the future price is higher than today’s price, so the curve slopes upward. In a normal world it’s a sign of optimism, risk or both. Backwardation, the opposite, means prices are expected to fall.

The following table shows what European forward curves looked like on 15 October, with all countries in backwardation apart from France:

And so it goes up to 2030. So France is alone in contango. And yes, that’s actually a good sign. The explanation is simple: everyone else still lives in a gas-indexed world.
German, Dutch and Italian power prices move with gas. When gas falls, the whole forward curve falls with it. It’s not “market structure”. It’s fuel correlation.

France is different. French prices reflect the fundamentals – nuclear, renewables and political risk – not just the TTF curve (Europe’s benchmark gas price). Which means its forward curve is doing exactly what it should: pricing risk over time rather than mirroring molecules. Critics see contango and scream “dysfunction”. But I would argue they’re wrong. It’s not dysfunction, it’s a mirror.

What about the neighbours?

Let’s look at France and Spain. We’re swimming in France with clean power: nuclear baseload, solar oversupply, negative hours multiplying. In 2024, France exported 18% of its total production. From January to September this year it was 17%. So, a sixth of the total production is leaving the country.

That’s oversupply, temporary but real. French demand is slowly increasing, up 1.6% year on year from January to September. And that’s exactly what creates contango: when today’s price reflects excess but tomorrow’s price reflects more balance: data centres, electric vehicles, new demand. The upward curve is not an error. It’s the market saying: “Today is cheap. Tomorrow won’t be.”

Then comes risk, the invisible line item in every forward price. Criticising contango is basically denying how markets work. There’s a cost to time, to uncertainty, to political instability. And France suffers from all three. The country has seen repeated government reshuffles this year. Energy policy shifts faster than a wind turbine blade. You don’t price that with certainty. You price it with a premium. That’s what contango is: a premium for uncertainty. From that perspective backwardation means the future is more certain than the present. Counterintuitive, isn’t it?

Blame game

Of course, it’s fashionable to blame EDF. Too expensive, too conservative, too dominant. But in my opinion, the French state energy company is an easy target and that’s lazy analysis. Is EDF overpricing? Hardly. It’s managing risk. And ensuring profitability. Selling forward at too low a price would mean locking in losses, which the state and the taxpayer would have to cover later.

Former EDF CEO, Luc Remont, said “a state company is not here to subsidise a small private club”. In short, selling too low is not competitiveness. It’s a transfer. A low forward price may look good for industrials but it’s bad for EDF and bad for citizens who ultimately cover EDF’s financial losses. It’s a hidden subsidy dressed up as market efficiency. Is the Cal 2028 too high? Possibly. Maybe not. That’s what risk assessment is for, not headlines. Each player reads the curve through their own exposure. Industrial, trader, generator: three views, one market to govern them all.

The French regulator CRE evaluated nuclear generation costs for 2026-2028 at EUR 60.30/MWh in a report published in late September. The Cal 2028 was EUR 62.32/MWh at the time of writing. Nothing shocking there.

Price matters

What’s certain is this: there’s nothing abnormal about contango. It’s the sign of a market that’s functioning by pricing abundance now and risk later. Standing alone doesn’t make you wrong. Having one of the cheapest power prices in Europe simply means France already won.

In the end the price is what matters. The barbarian concepts of contango or backwardation are just noise. We’re right, let’s not forget it.

This article originally appeared as a column on montelnews.com