Europe's River Drought Cuts Power Output, Disrupts Transport & Hurts Earnings
Impact of Record Low Water Levels on Europe's Economy and Infrastructure
By Forrest Crellin, Aleksandar Vasovic and Luiza Ilie
PARIS/BELGRADE/BUCHAREST, July 31 (Reuters) - Record low water levels in Europe's major rivers have curtailed the transport of goods, reduced electricity output and shrunk company earnings, stoking fears about the economic impact of searing heat and erratic rainfall.
As Europe experiences the fastest warming of any continent and record-breaking heatwaves, drought has exposed the need to reconsider business practices.
From the bustling port of Rotterdam to hydropower plants in Serbia, waterways have become a less reliable way to transport goods such as grains and oil, or to produce much-needed electricity when millions are seeking to cool their homes.
"It's affecting not one region like we've seen in the past, but the whole European landscape," said Alessandro Armenia, a power analyst at commodities data and analytics firm Kpler.
"Given the current dynamics, it means either we're going to see blackouts or we need to invest way more."
Hydropower and Nuclear Output Cut
Production of nuclear power in Hungary and hydropower in Serbia have fallen because of record low water levels along the Danube, which passes through major cities like Vienna, Budapest and Belgrade on its route from Germany to the Black Sea.
Shutdowns and Reduced Capacity
The Paks nuclear power plant, which generates nearly half of Hungary's electricity, will be shut down on Monday, possibly for weeks because water levels on the river, which supplies cooling water to the facility, are expected to stay too low for it to operate safely.
At Djerdap 1, Serbia's largest hydropower plant, output has fallen to 20% of capacity, the plant's production director Davor Maljokovic told Reuters, as the once broad shipping channel beside it has shrunk to expose sandbanks and gravel bars.
The lack of water has also disrupted cooling systems at Serbia's Kostolac coal-fired power plants, forcing them to cut output, Serbia's state EPS power utility said.
Electricity Imports and Regional Impact
Both Serbia and Hungary say they will make up for the losses by importing electricity, a costly measure when demand on the spot market is high.
Romania's state nuclear power producer Nuclearelectrica also had to shut one of its two reactors earlier this week for the same reason, with the second expected to soon follow, potentially depriving the country of a fifth of its electricity needs.
France has also had to reduce nuclear power generation because of low water levels or rising river temperatures.
Water Levels Also Disrupt Transport
Energy is not the only loser.
Shipping and Agricultural Challenges
Cezar Gheorghe of Romanian grain market consultancy AGRIColumn told Reuters on Friday farmers along the Danube were having problems shipping their crops because low water levels stopped barges from using several river ports.
“Only the ports which are closer to the Black Sea are still operational. Barges can’t go through the others,” Gheorghe said.
“Crops buyers could offer farmers lower prices and load them in trucks, although there might also be a shortage of trucks.”
Impact on Rotterdam and Cargo Transport
Meanwhile, the volume of cargo transported to and from Rotterdam - Europe's largest sea port - to the Rhine has fallen slightly each week since the beginning of July and is around 10% lower than normal, a port spokesperson told Reuters.
Chemical and oil product tankers and dry bulk carriers are particularly affected because of their normally greater draught compared to container barges, which means they sit deeper in the water and require greater water depths.
Drought Reduces Company Earnings
Apart from the natural devastation of wildfires and temperatures that have caused thousands of excess deaths, companies' balance sheets have suffered from the changing climate.
Utility Companies and Financial Losses
Austrian utility Verbund, which produced about 85% of its electricity from hydropower last year, said on Thursday that drought conditions reduced earnings by about €370 million in the first half compared with a year of normal hydrological conditions.
French state-owned utility EDF said on Friday that full-year earnings before interest, tax, depreciation and amortisation for 2026 were expected to fall by 10% because of low market prices and as heatwaves reduced power output.
Threats to Agriculture and Water Supply
In Italy, the Po River basin has entered a state of high water scarcity, threatening rice crops and drinking water supplies across the north.
Chief Executive of regional utility A2A, Renato Mazzoncini, said he expected hydropower production this year of 3.9 TWh compared to a historical average of 4.1.
"Some of our reservoirs are under pressure," he said. "We practically need to start doing a rain dance."
(Additional reporting by Inti Landauro in Brussels; Giancarlo Navach in Milan; Danny Callaghan in Gdansk; Marleen Käsebier in Zurich; Rene Wagner in Berlin; Writing by Edward McAllister; editing by Barbara Lewis)
