In our blog post from 25 June, we focused on the recovery of hydropower production in Southeastern Europe in June after a period with low production. Here we will focus on the development in Romania during July and the further outlooks.
Hydropower situation in Romania
During June (weeks 24-28) the production in Romania rose significantly due to a wet period:
The production level during April and May were at a nearly all-time low due to moderate precipitation and a meager snow package:
The situation this year until June was very different from the 2019-situation. We then saw large snow reservoirs and solid production during the melting period in May 2019.
The hydro reservoir levels rose to 95% filling rate last summer, and this also seems to happen this year, see below. This year, the reservoir filling was below normal before the high inflows in June, and are these days reaching the 95% level.
Thus we expect high production given normal precipitation during the rest of Q3 and further out during Q4.
But, as we see from the first chart, the production level during Q3 and Q4 for 2019 was lower than normal despite high reservoir levels as the precipitation turned out rather low.
Market view
As the hydropower production in Romania and most Southeastern countries rose during June, we saw falling price differences between Austria and Hungary/Romania: During July the price difference out at an average of about 3 €/MWh, while the difference was nearly 9 €/MWh on average in April.
The high production and normalized hydropower situation can explain most of the reduced difference.
The traded August base contracts show the same development with a falling price difference. Since the beginning of June, we see the price difference traded down from 12 €/MWh to about 7 €/MWh.
Final words
The hydropower situation in Romania and most of Southeastern Europe improved in July after a wet June. Price differences between Austra (CWE region) and Hungary/Romania (SEE region) are significantly reduced from the start of Q2. Outlooks for August indicate that the price difference most likely will come out lower than 7 €/MWh which has been traded in the end of July.
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