When thunderstorm Alex hit France and the Alpine region on 2 and 3 October it caused devastating flooding in several areas as precipitation hit once-in-a-century levels. In this blog post, we assess the impact on CWE spot prices and the hydrological balance in the region.
Energy Quantified (EQ) published a blog post on 6 October where we shared our preliminary assessment of the impacts from thunderstorm Alex. In this update, we quantify the impact on prices and the hydrological balance (weeks 40-42).
Key takeaways from this update are:
- For week 40 – ending at Oct 4th – the weekly net energy precipitation in Switzerland, France, Italy and Austria was 13 TWh (219%) higher than normal
- Hydropower production in weeks 41-42 increased about 4500 MW from levels in week 39
- The spot price impact of the increased hydropower production in the region was in the 0.9 – 1.6 €/MWh range for weeks 41/42
CWE spot price impacts
The estimated 4500 MW increase in hydropower production across the CWE region over weeks 40-42 were unevenly distributed across the countries we have assessed:
Using our spot price sensitivity model we continually estimate the spot price relative to the changes in production levels in each country.
The chart below shows the price sensitivity curves for the hourly spot price in France for Thursday 8 Oct relative to varying production levels, in this case, +/- 2500 MW, 5000 MW and 7500 MW. Sensitivities are calculated for each hour and change every day based on the power balance situation.
We have estimated the partial price-effect for the increased hydropower production for France, Switzerland and Italy for week 41 and 42 to be between – 0.73-1.15 €/MWh:
These estimates are based on a country-by-country effect, but since these countries/areas are to varying degrees connected, we believe that the combined price-effect is stronger.
We see from the actual spot prices that FR and CH are most strongly connected in this period, while Italian prices are – not surprisingly – a bit higher.
Assuming a 75% interaction FR/IT in addition to the partial estimate, we derive from this the following total price impact from the increase in hydropower production:
Key hydrological data week 39-41
The increase in precipitation period started already during week 39, and for the period week 39-41 we have estimated net precipitation to as shown in this table:
We estimate that about 15%-20% of the precipitation during week 40 has was spilt outside the power plants and hydro reservoirs. The net accumulated precipitation for the period is about 13 TWh above normal, while the hydrological balance at the end of each week evolved as seen in this table:
We observe that the hydrological balance – by end of week 41 – has improved by 11.5 TWh since the end of week 38, which means that hydropower production has been 13.0 – 11.5 = 1.5 TWh higher than normal during that period. By the end of week 42, the hydrological balance in all CWE-countries was stronger than normal.
Final words
The short-term effect of the improved hydrological balance across the Alps has been calculated based on our sensitivity model. EQ will continue to assess the impact on spot markets when such "hydrology shocks" occur.
The price impact of fluctuating hydropower power production is often difficult to evaluate as production levels as hydropower’s share of total production is limited in the CWE area. Energy Quantified's spot price-sensitivity model helps users assess the price-impact of hydropower in other regions as well.
And don't forget to sign up for more details about the hydrological situation.
