A proposed closure of France's oldest nuclear power plant, if rushed, would strain the grid and raise the risk of blackouts in France and nearby south-western Germany, which already suffers from supply gaps after eight nuclear plants shut last year.

French Socialist candidate Francois Hollande, who is leading in polls to become France's next president in May, has vowed to close the 34-year old Fessenheim nuclear plant, which is unpopular due to its age and location in an earthquake zone.

He has not said when in his five-year mandate he would close the plant down. The timing would be crucial, because grid operators and markets need more than a few months' notice to prepare for it.

If Fessenheim was closed, there would be a concrete issue for electricity grid operations to secure supplies locally in south-western Germany, said Fabien Roques, head of research at independent consultancy body IHS CERA.

Fessenheim brings production to a specific point on the network, which helps it cope with record power demand during cold waves, Roques added.

If the 1,800 megawatt nuclear power facility located between Mulhouse in France and Freiburg in Germany was shut as soon as this year, Germany would struggle to ensure stability of supply in its fragile south-western region, he said.

France itself would also feel the pinch during peaktime demand in the winter, when it relies on all available power production facilities to meet constantly rising demand levels.

French electricity demand reached a new record high at of 101,700 MW during a cold snap in early February, 105 MW higher than French power production at the same time.

A loss in nuclear production would widen the gap between supply and demand at peak time even further. Comparable figures for Germany were not available.

RTE, which operates France's high-voltage lines, and nuclear operator EDF declined to comment on the impact the shutdown of Fessenheim would have on supplies.

IMPACT IN GERMANY

After the Fukushima disaster in March 2011, Germany decided to shut eight nuclear power plants, four of which are located in the densely populated and industrial south-western region, which includes large cities such as Stuttgart and Heidelberg.

The region now needs to import more power from northern Germany, which has a high level of wind power output, and also from neighbouring France, Belgium and Luxembourg, analysts said.

A spokeswoman for Germany's EnBW Transportnetze, the most south-western of Germany's four grids, said the closure of Fessenheim would have an impact on its network.

Alternative and non-nuclear power plants in the area would have to be used more frequently than before to maintain the regional network balance, she said.

On top of regional network problems, the closure of Fessenheim could impact drawing rights held by Germany's E.ON to take up to 800 megawatts (MW) of electricity from EDF's Fessenheim and Cattenom nuclear plants, both located near the German border.

E.ON could instead receive drawing rights from other French nuclear plants, or the agreement could be reduced equally on both sides, a spokesman for the German utility said.

FRENCH SUPPLIES HIT TOO

If Hollande moves ahead with his pledge soon after the election, this would tighten France's supply situation and send peaktime electricity prices higher, power traders said.

Last month's cold snap emphasised how vulnerable the French electricity market was to winter weather because of its heavy reliance on electric heating.

French power consumption surges by 2,300 MW for every one degree Celsius drop in temperatures as people turn up electric heaters.

As a result of the supply tightness, prices went through the roof, and RTE issued warnings urging the public to refrain from using electrical equipment, such as washing machines or coffee makers.

Every year we see a new record demand, so taking off Fessenheim would definitely mean higher prices and supply deficits in the winter, one London-based power trader said.

Hollande's energy spokesman, Bernard Cazeneuve, refused to comment on the consequences of a Fessenheim shutdown.

Traders and analysts said they believed France, Europe's biggest electricity exporter, would not move ahead with the closure before having built a sufficient amount of capacity to compensate for the loss.

So maybe he will close it in 2017, and the impact on power prices will then depend on how aggressively France builds new wind farms, new gas-fired plants and new biomass to compensate for the missing capacity, the London trader said.

EDF is in the process of building a next-generation 1,650 MW nuclear reactor in northwestern France, which is expected to come on line in 2016 after it was initially expected for 2014.

If the reactor is further delayed, then it could complicate things, another trader said.

(editing by Jane Baird)