A heatwave hitting the European continent could lead to a sharp rise in electricity prices due to water shortages, Bloomberg reported.
Reservoir water levels are unusually low across a region stretching from Scandinavian countries to the Alps. Water storage at hydroelectric power plants in Italy, France, and Switzerland has fallen to multi-year lows. Unless a significant increase in precipitation occurs, Europe will need to rely more heavily on fossil fuels this winter, as electricity generation from solar power plants decreases during the colder months.
Hydropower capacity and financial damage
Lower reservoir levels during the winter will cause a drop in electricity generation and push power prices higher. Hydropower accounted for more than 10 percent of the European Union's total electricity supply last year. Meanwhile, forecasts indicate that economic losses in France caused by the extreme heat and resulting wildfires could reach between 3 billion and 6 billion euros.
