PARIS, France – The future energy mix demands the coexistence of nuclear and renewable energy (RE) technologies, but the growing prevalence of RE-induced negative pricing is exposing fundamental weaknesses in new market design—weaknesses that nuclear power supply agreements (PSAs) must confront head-on if long-term revenue stream certainty is to be locked in.

This was among the substantive topics discussed during an exclusive interview I had with Mr. Olivier Bard, CEO of GIFEN (the French Nuclear Industry Association). Mr. Bard emphasized that as new nuclear projects continue to redesign their PSAs, they simply cannot afford to structure contracts in isolation from a market increasingly distorted by renewable-driven negative pricing.

In the French energy market, in particular, it has already been demonstrated that nuclear as a baseload capacity and high renewable penetration can successfully coexist within the energy transition. However, as wind and solar increasingly drive electricity prices below zero, a new commercial tension is emerging. This tension reveals a structural mismatch between renewable-triggered price volatility and the rigid operating and economic architecture of nuclear power, putting traditional PSAs under growing distress.

Mr. Bard qualified that hydropower stands somewhat apart among renewables because it uniquely combines fast-response flexibility with large-scale storage. Thus, it is typically positioned as the system’s critical balancing force in an energy mix where nuclear delivers a steady baseload while wind and solar introduce inherent volatility.

But to begin with, why do negative RE prices happen?

Well, electricity prices can go below zero when supply exceeds demand. This occurs when solar output peaks during sunny periods, or wind generation surges during low-demand hours, and grid flexibility or available storage systems are insufficient to absorb the excess energy. Typically, subsidized RE generators keep running even when prices turn extremely low or negative because they are cushioned by alternative revenue streams.

As things stand today, many energy markets are already facing recurring negative-price trends as rising renewable installations push supply beyond what the system can absorb.

So why are nuclear power facilities being affected by negative pricing? It is because nuclear plants are designed to operate continuously at high output, critically fulfilling their role as "baseload" generation in the energy mix.

Yet, when market prices dip below zero, nuclear operators find themselves in an uncomfortable bind: either paying to keep running or cutting output in ways that are costly, operationally inconvenient, or disruptive to planning. Consequently, this introduces uncertainty into their earnings profile, making the financial case for new nuclear projects harder to defend to lenders.

In France, Mr. Bard noted that nuclear output can swing dramatically from around 60GW down to as low as 20GW or 40GW at times. This reality puts a sharp focus on how legacy PSAs and contract structures, which were previously built on steady and predictable revenues, no longer hold up in today’s high-renewables market.

In structuring commercial contracts for new nuclear projects, Mr. Bard emphasized that a high level of renewable deployment should not be treated as a “side detail,” but rather as a defining constraint.

That’s precisely why modern PSAs now increasingly lean on fixed-price deals, guaranteed minimum revenues, contracts for difference (CfDs), or regulated asset models. These mechanisms are designed to shield nuclear operators from being squeezed by prolonged spells of low or negative prices.

Nuclear and renewables may share low marginal operating costs, but nuclear carries a heavy burden of upfront capital that only makes sense if revenues are large, stable, and long-dated. As renewable generation increases and negative price events become more frequent, new nuclear projects become harder to finance. This is why recent nuclear ventures often rely on long-term contracted revenues rather than exposure to volatile spot market prices.

Negative pricing caused by high renewable output does not usually threaten the physical operation of nuclear plants. Nevertheless, it can significantly undermine the economics underlying commercial nuclear power supply agreements by reducing and destabilizing the revenue engine, especially if the PSAs are poorly designed.

Because of this, lenders are no longer simply financing reactor builds; they are effectively wagering on whether the underlying contractual frameworks can withstand a future shaped by massive-scale RE integration and repeated negative-price shocks.

In any case, capital providers want one firm assurance: that chronic negative-price periods won’t erode project revenues. The real test in any nuclear deal is whether contracted cash flows remain intact even when spot prices collapse below zero.

It is equally critical to clearly demarcate where the risk sits: whether it remains with the nuclear operator, the utility off-taker or capacity buyer, or if it will be partially absorbed by a government counterparty stepping in to smooth out capital deployment risks.

Another indispensable set of design questions for nuclear PSAs includes whether output can be curtailed at all and, if so, whether these curtailments are compensated through deemed-energy payments or left entirely unremunerated. At the end of the day, any uncompensated curtailment directly undermines debt service coverage.

Broadly speaking, banks and other institutional lenders prefer deal structures that shift negative-price risk away from the project company, keeping exposure to market volatility off the balance sheet of the asset they are financing.

As energy markets recalibrate toward "energy security" goals in the wake of heightened geopolitical shocks—from the Middle East crisis to the Russia-Ukraine war, alongside wider disruptions in global energy trade—nuclear power is being reassessed. It is increasingly viewed not just as a decarbonization tool, but as a strategic resilience asset in a system where high dependence on imported fossil fuels has become a foundational vulnerability.

During recent episodes of extreme market stress, nuclear power reinforced its value by delivering high-capacity factor generation with steady output and relatively stable long-term operating costs. The technology stood out as a rare pillar of reliability when the broader global energy system came under extreme pressure due to fuel shortages, price spikes, and overwhelming supply chain disruptions.

On that basis, major lessons can be highlighted from recent geopolitical crises: electricity markets often undervalue resilience. While nuclear plants may appear relatively expensive compared with RE technologies (primarily wind and solar) on a pure energy-cost basis, the strategic importance of nuclear as a source of secure electricity becomes much higher in times of gas/LNG supply fragmentation, oil price shocks, or global conflicts.

In concrete terms, nuclear reactors run on comparatively small amounts of fuel that can be stockpiled for years on-site or secured through existing supply chains. This insulates them from commodity price volatility and reinforces their role as a strategic buffer that energy markets can leverage during international upheavals.

Within the European market, Mr. Bard noted the paradox that even countries which have opted out of the technology still lean on cross-border nuclear fleets in moments of stress, underscoring nuclear’s stabilizing function when geopolitical shocks and other extreme events ripple through energy systems.

The logic follows then that as markets double down on energy security goals, nuclear can be the real long-term game—but only if it is treated as a core asset in the energy mix, not just a backup plan lurking in the margins of the energy transition pathway.