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Spot prices increase as Central Western European hydropower production hits 25 year low

Eylert Ellefsen
Archived blog post. This blog post has been transferred from our previous blogging platform. Links and images may not work as intended.

(Aerial photo of Lac du Cleuson in Switzerland. Water from the reservoir is often pumped into the Grande Dixence Dam's reservoir, Lac des Dix, for use in hydroelectricity production.)

This April has seen a notably cold spell of weather sweep across Europe. Temperatures have been 4 or 5 degrees Celsius below normal in most areas, whilst spot prices for the past month have delivered 5-7 €/MWh higher than expected in several areas. In this blog post, we study how the Central Western European (CWE) hydropower system developed during this cold spell and compared this situation to available historical statistics.

To understand this year’s scenario, we must first look at the low temperatures which have had a significant impact on the hydropower system in the CWE area. With the expected snowmelt being delayed as a result, energy inflows have been reduced and we now see very low water reservoir levels for this time of year. Consequently, hydropower production declined significantly in most CWE countries during March and April.

Key findings

  • The hydropower production across CWE (AT + FR + DE + CH) for April is at it’s lowest level for 25 years
  • Even at individual country level we still see these 25-year lows
  • Low hydro-reservoirs for Austria and Switzerland has hampered the production level recently
  • Very low inflows in France and reduced run of river production have been significant factors in the lower-than-normal total production level.
  • Inflows for the first part of May will remain significantly lower than normal. Production levels will not increase significantly therefore in the next 2 weeks - due to the delayed snowmelt

Production during April 2021 – 25-year statistical comparison

From the chart below, we can clearly see how production levels fell as early as mid-March for France and around mid-April in Switzerland. The low production for France is mainly due to low inflows, while the low Swiss production has been caused by very low reservoir levels. You can read more detail on these issues on Energy Quantified's hydrology webpages.

Weekly net hydro production for France since December 2020. The dark line is actual production, the thick, green line is the normal.
Weekly net hydro production for Switzerland since December 2020. The dark line is the actual production, the thick, green line is the normal.

For April 2021, the production details across CWE are summarized in the following table:

Hydro production by country in April 2021.

This shows that CWE production is about 4500 MW lower than normal, which is equivalent to somewhere between 4-5 Nuclear blocks. The resulting price-effect for France (using a simplified method) is estimated to be about 3 €/MWh, when compared to years with more normal hydropower levels.

From the chart below, you see the 25-year history of April production for CWE as a whole, alongside the production of France. Year-on-year outputs are well correlated because France is the largest hydropower producer in the CWE area. The 2021 statistics for both are at the lowest observed levels since 1997, when our statistics start. This proves that temperature is a very decisive factor for CWE hydropower output for this time of year.

25-year statistics on hydropower for April. X-axis shows the year. Comparing actuals vs normal for CWE (two upper lines) and for France (two lower lines).

We can also show some details for the April-inflows and the reservoir-levels, see tables and chart below.

Inflows in April and reservoir filling at the end of April by country.
Weekly total hydro reservoir filling. Showing min-max boundary since 2015, the average, and 2021 (black line) and 2018 (green line).

From this, we see the strongly correlated inflow level across CWE. This is probably close to the lowest we’ve seen in 25 years too, but EQ does not have the data available for that entire period yet. Concerning the reservoir levels, the 2021 level is close to what we saw in 2018. This is visible in the chart below, where we show the weekly statistics for the 2015-2021 period.

Final words

In this blog we have focused on extremely low hydropower production across the CWE area in April and how this has resulted in higher spot prices in specific areas.

Beyond this, we follow all fundamentals in the European power markets, publishing blog posts explaining notable instances such as this one.

Hydrology also remains an important part of the analysis service from Energy Quantified, enabling us to publish both qualified forecasts - as well as statistics as in this case.

If you have any questions about this blog, or hydrology in general, please get in touch at contact@energyquantified.com.

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