The drought threatens to knock out the production of hydroelectric plants. And it is driving electricity prices through the roof in Europe. The simmering climate and the Russia-Ukraine war are the explosive mix that is boosting electricity demand, cutting renewable production and pushing prices to record levels. In fact, the expectation is that Russia will further tighten the taps of the gas pipelines to keep Europe in check at the first signs of the winter season. And the crazy climate is also reducing wind production: there is little wind.
Electricity prices are already anticipating record increases for next year in Europe: on theEEX (European Energy Exchange) the benchmark contracts for Germany travel at 455 euro/MWh (+6,6%) and the French ones soar at 622 euro/MWh (+7,8%). Figures that correspond, observes Bloomberg, to 1.100 dollars for the energy equivalent to a barrel of oil, a level never experienced before. Particularly difficult is France, which has almost half of its nuclear power plants under maintenance and has to import electricity from abroad, transforming itself from an exporter into a net importer of electricity. This forces neighboring countries to burn more gas to guarantee domestic supplies and exports.
Fiery summer, skyrocketing electricity prices, hydroelectric KO
The summer, in Western and Southern Europe, was on fire. And it still is. Temperatures of 40 degrees and no rain have dried up rivers and reservoirs. In June renewables covered 35% of the national electricity demand: wind power (+32,2%) and photovoltaic (+7,7%) are on the rise, but hydroelectric power is on the decline (-37,4%) with about 2 TWh less. "It should also be noted that in Northern Italy the level of the reservoirs records values close to historic lows (31%)", stated Terna's press release at the end of July.
A purely cyclical fact destined to pass with the autumn rains (if they arrive)? It's not for sure.
It is useful to remember that the share of gross final energy consumption covered by renewables is equal to 20,4% in Italy, about one fifth of the total. In the case of electricity consumption, on the other hand, the share of renewables covers 38,1% and hydroelectric is the largest slice of this pie: 40,7% of the total based on the GSE Statistical Report on renewable sources of 2020. Solar was at 21,3%, wind at 16%.
Numbers that have remained stable but which now summer 2022 risks turning upside down.
"We are experiencing a situation that is unprecedented in our industrial history," Francesco Fornari (Enel) told the online newspaper Politico. Enel controls about 500 hydroelectric plants in Italy. Fornari reports that the group's electricity production in Italy has practically halved this summer compared to 2021, especially in the North where the impact of the drought has been particularly felt. The unusually high temperature of the water used to cool the systems also has an influence. The result is that some have also been closed to use the water reserves for irrigation.
Dry plants not only in Italy, Spain and France also suffer
It is not only Italy that is suffering. Spain and France are also dealing with drought and the vertical fall of hydroelectric power. In both Spain and France, water levels have dropped to the lowest level in the last 20 years. France has the largest installed hydroelectric capacity in the Eurozone. The French national giant controls a thousand plants, including dams and hydro plants on rivers, and declared a filling level of 67% 13 points lower than the average, with a drop in production of 5,7 terawatt hours, equal to approximately one quarter of the total, in the semester.
Numbers that make an impression and that make Glenn Rickson, head of European analysis of S&P Global, some speculative drive. If it is true that in Western Europe reserves in July were at their lowest in the last twenty years, it is also true - observes the analyst quoted by Politico - that even where reserves hold, there is an incentive to conserve stocks to put them in the field in winter when prices will reach even higher levels”. In practice, an incentive for utilities to keep water in reservoirs and use it at the most convenient time.
Change the value of water and that of hydroelectric
It is the value of water that is changing and “we expect hydropower to play a different role in the future” says Matteo Bianciotto of International Hydropower Association (IHA). In particular, greater use of pumping is foreseen (returning water to the reservoirs at night when the price of electricity is lower and using water during the day when prices rise). However, it will be necessary to invest to adapt the plants or for hydroelectric producers the future could become less rosy.
