This week’s episode discusses the hydrological situation in the Nordic and Alpine regions. Reservoir levels in Norway, Sweden and Finland are lower than average, but do not currently pose concerns for winter supply. Listen to a discussion with Mr Hydrology about power exports from Norway, and the outlook for river flows and temperatures in central Europe. Will cooling issues plague France’s nuclear fleet again this summer?
Host: Richard Sverrisson, Editor-in-Chief, Montel
Guest: Eylert Ellefsen, Analyst, Energy Quantified
[00:00:00] Snjolfur: Hello listeners and welcome to the Monte Weekly podcast, bring You Energy Matters in an informal setting. This week we discussed hydrology. Several parts of Europe have seen plenty of rain recently, but what does that mean for Nordic and Alpine reservoirs? Current levels are lower than average in the Nordic region, but are improving in continental Europe.
[00:00:30] Snjolfur: What's the outlook for the coming months? Can we expect more cooling issues in France and will reservoir levels in the Nordic region be enough to allay concerns over winter supply? Helping me? Richard s Farson to discuss these matters is Mr. Hydrology himself elect Ellison of Energy. Quantified a warm welcome to elect.
[00:00:49] Eylert: Thank you, uh, Richard. Richard, and really nice to be invited to, uh, to a new hydrology podcast. Absolutely.
[00:00:56] Snjolfur: It's great to have you back, Alet. Um, now let's start by discussing the [00:01:00] situation closer to home. So now the Nordic region saw a very dry. First half of June. Um, nice, sunny weather. But how has this affected prices and concerns over hydropower supply going forward?
[00:01:14] Eylert: Uh, well, I, if we take the total, uh, hydrological balance across the Nordic. Region, uh, to discuss that, let's say more to compare with how was it last year? Uh, how, how is this year compared to last year? Because the, uh, hydrological balance this number for the average or total, uh, Nordic. Uh, hydro power, uh, balance is, uh, currently, well minus six, minus seven maybe, uh, OT hours while we last year at the same time had minus 10.
[00:01:49] Eylert: So it's not really so different, uh mm-hmm. The total number, but the distribution is very different. Mm-hmm. So the, let's say, hydro power situation across, uh, the Nordic, uh, [00:02:00] uh, region is, it's, uh, evaluated to be quite different from last year, but it. And, and, and it's the distribution because the northern area, uh, Sweden one and two, and, uh, N oh two, n o n oh three and N oh four has a deficit.
[00:02:18] Eylert: This, uh, this, uh, summer compared to last year with a, uh, with a large, um, uh, surplus. And we saw this, uh, huge price differences between Sweden two and Sweden three last year, which doesn't happen this year. So just,
[00:02:35] Snjolfur: just to, sorry to interrupt the edit, but to say, so Sweden, two and three, which areas are those, uh, for those, those listers who aren't aware of Okay.
[00:02:41] Snjolfur: Of the Nordic price zone? Yeah,
[00:02:42] Eylert: yeah, yeah. Sweden two is, uh, not on Sweden and Sweden. Three is the Stockholm area. Okay. So this difference, which was so much focus on last year, also the difference between, uh, the northern part of Norway and the southern part of Norway. This difference, uh, is at least [00:03:00] in Sweden, uh, Strongly reduced because of, uh, the deficit or normalized in a way, hydropower situation in the north.
[00:03:09] Eylert: Mm. So is there a surplus anywhere at the moment? No. The, this is also quite, uh, um, important or significant for the situation. There's, uh, a deficit. Uh, uh, in all areas, but, so it's in a way well-balanced, uh, distribution of the deficit. Okay.
[00:03:30] Snjolfur: And what, what does that mean for the market and for,
[00:03:32] Eylert: for prices?
[00:03:33] Eylert: Yeah. It means that, um, Most area will, uh, have a production level, uh, let's say slightly below normal for the summer as I see it, in particular in, uh, northern Sweden and, uh, northern Norway. Mm-hmm. While, uh, southern Norway, uh, seemed to be very close to normal situation. Mm-hmm. So I think, for example, uh, Export [00:04:00] conditions, uh, power flow towards Germany and uk, which has been so strongly discussed, uh, from Southern Norway will take place, uh, without any, let's say, uh, large, uh, uh, deviation from the normal gas war curve.
[00:04:17] Eylert: Mm-hmm. Uh, at least now for the next month as I see it.
[00:04:21] Snjolfur: So, So if I understood you correctly, I let you, you said power will still flow from, from, from Norway to to, to Germany and to the
[00:04:30] Eylert: uk. And, uh, of course, uh, price. Uh, price, uh, prices are lower in, in, in oh two, but, uh, as I see it, the, the, the, let's say, I guess a wall balance will not.
[00:04:42] Eylert: Be so, uh, deviating from the normal curve despite this export volumes to, uh, Germany and, uh, UK because you also have the power flow towards Denmark and Netherland and Sweden. Sweden three. Mm-hmm. So, um, [00:05:00] and this is quite interesting for, if you look at the curve in southern Norway this winter, uh, since New Year, it has followed the normal curve.
[00:05:10] Eylert: Very close. Uh, then the last, uh, month with a delayed snow melt, it, it deviated, uh, somewhat, but now it's very close to normal again. So despite this export conditions that are so, so focused in the, in the press, um, I think the, uh, Norwegian Hydro power producer has, in a way learned a lesson, how to behave with the export, the ex, uh, uh, extended export conditions.
[00:05:41] Snjolfur: So do you expect a kind of more similar scrutiny of exports out of Norway? On, on, and you mentioned the press, the media or politicians.
[00:05:51] Eylert: Yeah, they've been so much more focused, uh, that they have to think a bit more on the power supply situation in, uh, because, [00:06:00] uh, Norway still 90% is hydro power dependent, and it's a lottery.
[00:06:05] Eylert: It can become very dry, it can become very wet. So you have to, uh, find a balance when you're doing the production, uh, optimization. Absolutely. So what, what,
[00:06:16] Snjolfur: what? In terms of the weather outlook for the, you know, it's, it was very diff difficult to predict the weather beyond sort of 10 days or accurately at any rate.
[00:06:24] Snjolfur: But for the, for the coming weeks and, and months, maybe the summer period. What, what does, what are the weather forecasters saying?
[00:06:32] Eylert: I think, uh, I haven't studied, uh, the seasonal outlook so closely. Uh, but I think in general we will get the situation now during the summer where if you think of those, uh, region, uh, Noal North, uh, Sweden North and Norway North.
[00:06:52] Eylert: Mm. We'll have, uh, we'll see aga oir, a curve that will be somewhat below normal. Mm-hmm. Because there is a hydrological [00:07:00] deficit at the moment while in southern Norway. I think the gir curve will be very close to the normal curve as I see it. So kind of a normal, normal, yeah, yeah. Quite normalized situation there.
[00:07:11] Eylert: So no drama, no drama present. No. No. And uh, particularly the difference from last year when we had a very strong surplus in the north and the strong price differences between Southern and uh, and northern, uh, areas across ple. So we don't, we'll see. I expect then a situation this summer with a more moderate.
[00:07:31] Eylert: Price differences mm-hmm. Compared to last year. Mm-hmm. This is huge, a huge, uh, change, uh, a huge, a huge change in the situation. Mm-hmm. Mm-hmm.
[00:07:41] Snjolfur: I mean, is there a risk, do you think that Nordic uh, power prices could rise above German levels later this summer to attract imports? Uh, like for example, we saw in 2018,
[00:07:52] Eylert: Now, I cannot say that at the moment that, uh, okay, if it gets extremely dry, of course, but this will take a times, take [00:08:00] some time.
[00:08:00] Eylert: But I would say, uh, um, uh, the. Q3 2021. That was so extremely dry in, uh, Norway. Mm. And in particular southern Norway. Uh, this situation will, if this happen once more, uh, we will see maybe imports, uh, towards, uh, end of q3. Mm. In a varied dry scenario. Mm-hmm. I would say put it like this, but an extraordinary scenario.
[00:08:26] Eylert: Yeah. It must be an extraordinary situation. Yep. Um,
[00:08:29] Snjolfur: there was a lot of snow in the mountains in, in southern Norway this winter, and less so in the north, but. Spot prices remain much lower in the north, particularly in in Norway. How long do you think this would, would continue?
[00:08:41] Eylert: Yeah, I see that, uh, the last, uh, couple, the last days, uh, a bit strange when you had this huge price difference, uh, in oh three.
[00:08:53] Eylert: S eight two. That means that, uh, uh, prices in northern Norway are much lower than in northern Sweden. [00:09:00] Mm-hmm. I think it has something to do with, uh, some, uh, transmission, uh, uh, outages. Uh, but I expect that, uh, If the prices in the northern Sweden remains so close to Sweden. Three, I think also that the prices in Northern Norway will come closer to Sweden, Northern Sweden.
[00:09:22] Eylert: Mm. I don't think that price difference will remain so long. Mm. So
[00:09:27] Snjolfur: that's likely that there's a price likely to increase in, in Northern to talk to almost an equivalent level in, in. To, to northern Sweden?
[00:09:34] Eylert: Yeah, I think so. So then the price difference, not on Norway, not on Sweden, not on uh, not on Norway.
[00:09:40] Eylert: It's South Norway will, will decrease? I think
[00:09:42] Snjolfur: so, but for that reason because they're more on a par with, with the northern, the northern region generally. Um, Now moving on to other parts of the Nordic region. Uh, last week on this pod we discussed, uh, the situation in Finland. Um, Oculto three started commercial operations.
[00:09:59] Snjolfur: [00:10:00] So in April, as we discussed last week, how, how has this affected prices in Sweden and Finland?
[00:10:05] Eylert: Yeah, we have seen, um, we have seen some periods, uh, accommodate when we have, uh, strong wind power in Finland and not on Sweden. We see certainly negative prices in Finland. Mm-hmm. But it's not o it's not only because of Oculto.
[00:10:21] Eylert: You need, um, Strong wind power in addition. So better the, with the increased wind power capacity in Finland, we see this more and more often and prices in Finland and, uh, not on Sweden, uh, depends even more now. Uh, and let's say variations with the wind power, it's even more, let's say, significant than earlier.
[00:10:44] Eylert: Mm-hmm. And, uh, I think also, uh, we'll see an increased wind power capacity in not on Sweden. Uh, this year. Mm. So I made a, a grow for that, uh, with the, uh, increased, uh, [00:11:00] export. Uh, Conditions or, uh, export volumes from northern Sweden and Finland, uh, because of the increased wind power. Mm-hmm. So, so what, what was your, what was the conclusion there?
[00:11:14] Eylert: It will be, uh, the, by normal conditions, uh, the, uh, power balance will be stronger, that we will have more, uh, power surplus in, uh, not on Sweden. Mm-hmm. Plus fin than last year. Mm-hmm.
[00:11:28] Snjolfur: Okay. Interesting. And, but, and nor, and obviously Norway lags behind here.
[00:11:33] Eylert: Yeah, there is, uh, no wind power, no more wind power in the pipeline as I can see.
[00:11:38] Eylert: It, uh, is more on the neck there. There are more, uh, closures of wind power in the pipeline in Norway, so that's a quite different situation,
[00:11:46] Snjolfur: very different situation than between the Nordic countries there. Um, Now if, if we can talk a little bit about demand. Um, now industrial demand fell a lot in, in the energy crisis.
[00:11:58] Snjolfur: Uh, I mean you had covid and [00:12:00] then the energy crisis with the high prices. Mm-hmm. Do you, do you think that this, um, the demand will come back slowly or could come back more
[00:12:07] Eylert: rapidly? I don't must admit, I don't follow the, all this, uh, the industrial sector so well. Uh, but, uh, it seems like, uh, the return has been slower than expected.
[00:12:24] Eylert: Mm-hmm. So, but now it's okay. We had this energy crisis and, uh, electricity prices are still high. Mm, much higher than what we're used to. So, but not that extreme that we saw last year. So I still as. I think the, uh, electricity prices as will still reduce, uh, the return of the industrial demand.
[00:12:45] Snjolfur: Mm-hmm. Yeah.
[00:12:46] Snjolfur: So that, that would still, it'll be a slow return. Yeah. Yeah,
[00:12:49] Eylert: I think so. Mm-hmm.
[00:12:51] Snjolfur: Um, so no, I mean, there's no sort of, uh, return to pre, pre covid times as you see it, the nail it in terms of, um,
[00:12:59] Eylert: No, [00:13:00] I don't think so. And that's also, we can see that, uh, uh, the power balance in, uh, the Nordic weeds in this year by, if it had been normal hydropower and normal consumption by, uh, which we are see now, uh, the surplus is around 60 Tet hours.
[00:13:16] Eylert: Mm-hmm. Partly because of, uh, the reduced demand. Mm-hmm. And this, uh, surplus, uh, I made this long term view a couple of months ago, and this surplus will be slowly, uh, reduced mm-hmm. In the years to come because of increased demand. Mm. And not so, and it, and it depends on how fast, uh, more, uh, production will come online.
[00:13:39] Eylert: But I think in general, we have now, uh, a max export, uh, uh, volume from the Nordic area. Mm-hmm. I think that be slowly reduced, uh, the years to come. Mm. I mean,
[00:13:51] Snjolfur: some countries, especially Finland, you know, you've seen some, some forecasts of very bullish demand growth. I mean, do, do you share this view? Where do you [00:14:00] think demand growth
[00:14:00] Eylert: would, would come?
[00:14:01] Eylert: It must, I, I'm not really sure how this, the different, uh, then you have to study what will happen year for year, uh, in different countries. There are so many forecasts and so many messages about, about what will happen. So, uh, My, uh, I think there will, uh, we have to rate, uh, the real, uh, uh, strong trees in, uh, Nordic demand will be when you have, uh, production of, uh, hydrogen, but that requires even more offshore wind power it looks like.
[00:14:35] Eylert: And, uh, so, um, Towards, uh, 2030, I think the demand will not rise that strong, but maybe after 2030 with the hydrogen production really starts, then you have a strong increase. So between
[00:14:50] Snjolfur: 2030 and 2040, you see a strong boost then? Yeah. As as green hydrogen, uh, uh, comes onto. Yeah, into production anyway. Um, what happens with that [00:15:00] hydrogen?
[00:15:00] Snjolfur: It was another interesting matter, but, um, that
[00:15:02] Eylert: something else.
[00:15:02] Snjolfur: That's, that's another topic, I think for discussion that I like. But if we then turn our attention further south, um, I know you look at what's happening in the Alps and, and in France. What's, what's the current situation that we, last year we saw, you know, um, sort of quite.
[00:15:20] Snjolfur: Disturbing pictures of depleted reservoirs of the river Poe at, at very, very low levels. Mm-hmm. Um, and also you had cooling issues at, at, uh, at, in France. Um, you know, the river temperatures were low and temperatures too high to be able to call some of the nuclear reactors that are based near the rivers.
[00:15:38] Snjolfur: What's, what's the current situation
[00:15:40] Eylert: elect? Well, uh, the current situation is that, uh, it has been strongly, let's say improved compared to last year. I think. Uh, if we think of hydro power, uh, uh, situation, it's been nearly normalized. Uh, in France, for example, uh, in the Alps you have, uh, [00:16:00] Switzerland is a bit, um, uh, lower than normal.
[00:16:04] Eylert: In their hydrological balance. But I think Italy, even Italy, seem now to be close to a normalized situation. Mm. Uh, but, uh, I must say, when I follow the, uh, official data, uh, it's interesting every week to see the development in these countries. Uh, uh, but I think Italy has really recovered, uh, at least in the northern area where you have most of the hydropower plants.
[00:16:30] Eylert: Mm-hmm. And, uh, but when you had this flooding, uh, situation, this was more on the, uh, in the lowland. Uh, so it was not so extreme then in the alp, in the ALP region, but, uh, uh, it has had a normalized, uh, more normalized precipitation Mm, in, in the Italian Alps too. So, um, uh, I've been focused mainly then on, uh, what.
[00:16:58] Eylert: Uh, are the outlooks for [00:17:00] France and, uh, the giver flows and the cooling, uh, situation for nuclear plants. Mm-hmm. And, um, well currently these days there are very strong, uh, precipitation, uh, for France. So maybe we'll see a, an even better situation next week. But, uh, um, The river flow as it, uh, is currently a bit better than last year, but it varies between the rivers.
[00:17:25] Eylert: In France, for example, I follow the Grand Valley. Mm-hmm. Where you have, uh, like the plants, uh, St. Alban and Kastan, one of the largest plants. Uh, the river flow there is, uh, higher than last year. Okay. And, uh, and then the outlooks then. Uh, for July, uh, seem to be, uh, still, uh, a hot summer, uh, warning. Mm uh, maybe two degrees above normal, nearly as last July, but uh, there are forecasted more [00:18:00] rainfall, so there will be more rain.
[00:18:02] Eylert: During, um, uh, seemed to be from the forecast this July compared to last July, because last July was totally dry. Mm-hmm. So then it became so extreme, and then August we had so much, uh, reduction on nuclear plants. Mm-hmm. So I think they. Uh, at the moment, uh, the production, uh, my forecast is around, let's say 30 or 30 to, uh, gigawatt production in the nuclear plants in France.
[00:18:32] Eylert: Mm-hmm. While we last summer had down to 22 at the lowest during August. So I think, uh,
[00:18:39] Snjolfur: So that's almost 50% increase in availability, you think? Yeah. Due to the, to
[00:18:43] Eylert: the weather conditions. Yeah. I think the avail, I think, uh, currently the outlooks are not that bad. Uh, that's my, let's say conclusion. Uh, it's still, uh, a hot, some more forecast, but, uh, more precipitation and, uh, river flows seem to be on a [00:19:00] higher level.
[00:19:00] Eylert: And at least the, the, the gra wars are much higher in particular in France then,
[00:19:07] Snjolfur: and this is due to the increased rainfall that we've seen in, in current weeks and the forecast of, of more precipitation
[00:19:13] Eylert: Yeah. In the weeks to come. And I think also saving of, uh, water in the GIR for the winter. So they have to make sure that they have, uh, let's say full as I was, uh, when it comes to the winter.
[00:19:25] Eylert: Mm-hmm. I think that means more. Uh, it's more important now than it was, uh, before the energy crisis.
[00:19:32] Snjolfur: Yeah, absolutely. Cause the, the nuclear availability in France is obviously a massive driver, not only, um, for French prices, but the, the whole of the region. Yeah. And so, so the, the, the market participants and from, from all over the continent and and beyond are, are looking at what's happening in France.
[00:19:50] Snjolfur: So they, there'll be some relief to hear that July and August will not be, um, of the July and August. 2022 will not be repeated.
[00:19:58] Eylert: Um, uh, I [00:20:00] don't, I I can tell, uh, well, my, I, I'm estimating then July 1st, uh, August, everything can happen of course, but, uh, outlooks for July looks better. Okay. Yeah. Let's put it that way.
[00:20:11] Eylert: And, um, um, yeah, I think, um, This is something I've been following so closely in every this, uh, weekly webinar. So, uh, you have your weekly webinar. Yeah. And I always, always show this, uh, curve for the river flow in some rivers in France cause uh, but there are some rivers, uh, uh, in the northern area, uh, towards Belgium.
[00:20:37] Eylert: They are onshore and cut nos. Their flows there are quite low. Mm-hmm. So, um, In the Grand Valley a bit better than still. Uh, some regions are, uh, uh, very low. Mm-hmm. As I told you, cotton and shore, they seem to be, uh, facing, [00:21:00] uh, a difficult summer. Okay. So you got
[00:21:02] Snjolfur: Saint Obba and Saint Alba and, and Tristan that.
[00:21:05] Snjolfur: Seem to be okay, but the ones in the north could face some, some issues. Yeah. Seems like
[00:21:10] Eylert: J and um, Kaar. Was it? Kaar? Yeah. Mm-hmm.
[00:21:13] Snjolfur: Interesting. Um, and I, it's interesting also that uh, in the Nordic region, I know earlier this week, uh, there were instances of a very warm seawater effecting cooling issues as well.
[00:21:26] Snjolfur: Do what? Is this something that could, uh, crop up more and more
[00:21:30] Eylert: Yeah, but this is, if the river flow is low, then uh, the water temperature increases, uh, more rapidly. Mm. So more water. Uh, it doesn't, uh, then the water is not so hot so, so fast. So, uh, that's the simple regulation there. Mm. So, but there's not so many, uh, uh, uh, nuclear plants that are cooled from seawater, like in Sweden.
[00:21:56] Eylert: Okay. I, I think this especially Swedish, uh, [00:22:00] um, way to do it. I think it's grave graveling
[00:22:03] Snjolfur: isn't there? Maybe on Northern
[00:22:04] Eylert: French Coast, uh, they be all plants quite there, there are, there are so many of those. Exactly. Exactly. So that,
[00:22:11] Snjolfur: but that's interesting. But if we returned to the Alps, uh, and, uh, it was quite, you say the, the reservoir levels are quite healthy there now.
[00:22:19] Snjolfur: Um, but that. Was, was precipitation was quite, quite low over the winter, wasn't it in the Alps? Or maybe there's a lot of regional
[00:22:26] Eylert: variation? Well, uh, it started very low, uh, but from March and further out, uh, uh, the, but the precipitation has been quite normal. Mm-hmm. So we can see that, for example, uh, you can see that on the production curves too, from France and it.
[00:22:46] Eylert: When, uh, from, um, start of April, the hydropower production increased because you have more inflows to the river plants mainly. Mm-hmm. So that was a very typical sign of improved situation. Mm-hmm. But, uh, [00:23:00] uh, starting from New Year, uh, this snow levels were very low. Mm-hmm. So, but there was an improvement, uh, gradually during, uh, let's say q2.
[00:23:08] Eylert: Mm-hmm. And
[00:23:09] Snjolfur: as you're saying, the situation has normalized as well, I think, and I think that will come as a welcome relief to, to, uh, to many, um, yeah. Mm-hmm. As I, as I said, and I think, you know, people will be relieved or there was concerns that you'd see, you know, repeats of, I mean, going far back as 2003, 2006, the, and other, other, the more recent dry years.
[00:23:30] Snjolfur: But I think if that's not gonna be the case, certainly in July, then that's, uh, that's eases some supplied concerns, uh, ahead of the autumn in the winter.
[00:23:38] Eylert: Yeah. And um, yes, but still, uh, I think if you get this, uh, hot scenario, uh, precipitation will disappear. It will be more evaporation. So then you have, so, uh, But, uh, my forecast is, uh, okay, you can accept, uh, quite a hot July without, uh, [00:24:00] any strong problems.
[00:24:01] Eylert: But then outlooks then for August can be worse if you have a, another rather dry, uh, July.
[00:24:09] Snjolfur: Mm-hmm. Alet. I mean, it's all in, it all hangs in the weather, you know? Exactly. So, so thank you very much for being a guest on the Monte Weekly
[00:24:16] Eylert: podcast. Okay. Thank you for being invited, Richard.