Filling reservoirs, cooling reactors

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

Transcript

Richard Sverrisson, Editor-in-Chief, Montel: 0:06

Hello listeners and welcome to the Montel 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. 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 Sverrisson to discuss these matters is Mr. Hydrology himself, Eylert Ellefsen of Energy Quantified a warm welcome to you Eylert.

Eylert Ellefsen, Analyst, Energy Quantified: 0:49

Thank you Richard. And really nice to be invited to to a new hydrology podcast.

Richard Sverrisson, Editor-in-Chief, Montel: 0:55

Absolutely. It's great to have you back, eylert. Now let's start by discussing the situation closer to home. So now the Nordic region saw a very dry. First half of June nice, sunny weather. But how has this affected prices and concerns over hydropower supply going forward?

Eylert Ellefsen, Analyst, Energy Quantified: 1:12

If we take the total hydrological balance across the Nordic. Region to discuss that, let's say more to compare with how was it last year? How is this year compared to last year? Because the hydrological balance this number for the average or total Nordic hydropower balance is currently minus six, minus seven maybe OTT hours while we last year at the same time had minus 10. So it's not really so different. The total number, but the distribution is very different. So the, let's say, hydropower situation across the Nordic region is, it's evaluated to be quite different from last year, but it. And it's the distribution because the northern area Sweden one and two, and N oh two, NN oh three and N oh four has a deficit. This this summer compared to last year with the with the last. Surplus and we saw this huge price differences between Sweden two and Sweden three last year, which doesn't happen this year.

Richard Sverrisson, Editor-in-Chief, Montel: 2:19

Just to, sorry to interrupt the edit, but to say, so Sweden, two and three, which areas are those? For those listers who aren't aware. The Nordic price zones.

Eylert Ellefsen, Analyst, Energy Quantified: 2:26

Yeah. Sweden two is Northern Sweden and Sweden. Three is the Stockholm area. Okay. So this difference, which you was so much focus on last year, also the difference between. In the northern part of Norway and the southern part of Norway, this difference is at least in Sweden strongly reduced because of the deficit or normalized in a way, hydropower situation in the north.

Richard Sverrisson, Editor-in-Chief, Montel: 2:49

So is there a surplus anywhere at the moment?

Eylert Ellefsen, Analyst, Energy Quantified: 2:52

No, the, this is also quite important or significant for the situation. There's a deficit in all areas, but, so it's in a way well balanced distribution of the deficit.

Richard Sverrisson, Editor-in-Chief, Montel: 3:04

Okay. And what does that mean for the market and for prices?

Eylert Ellefsen, Analyst, Energy Quantified: 3:07

Yeah. It means that. Most area will have a production level let's say slightly below normal for the summer as I see it, in particular in northern Sweden and northern Norway. While Southern Norway seemed to be very close to normal situation. So I think, for example, export conditions power flow towards Germany and uk, which has been so strongly discussed from Southern Norway will take place without any, let's say large deviation from the normal rest war curve. At least now for the next month as I see it.

Richard Sverrisson, Editor-in-Chief, Montel: 3:44

So if I understand you correctly, Eylert, you said power will still flow from Norway to Germany and to the UK.

Eylert Ellefsen, Analyst, Energy Quantified: 3:50

And of course prices are lower in, in, in NO two, but as I see it the, reservoir balance will not be deviating from the normal curve despite this export volumes to Germany and UK because you also have a power flow towards Denmark and Netherland and Sweden. Sweden three. And this is quite interesting for, if you look at the ese war curve in southern Norway this winter, or since New Year, it has followed the normal curve. Very close. Then the last month with the delayed, the snow melt it. Deviated somewhat, but now it's very close to normal again. Despite these export conditions that are so focused in the press I think the Norwegian hydropower producer has in a way learned a lesson. How to behave with the extended export conditions.

Richard Sverrisson, Editor-in-Chief, Montel: 4:45

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.

Eylert Ellefsen, Analyst, Energy Quantified: 4:54

Yeah. They've been so much more focus on that they have to. Think a bit more on the power supply situation in because Norway still 90% is hydropower dependent and it's a lottery. It can become very dry, it can become very wet. So you have to find a balance when you're doing the production optimization.

Richard Sverrisson, Editor-in-Chief, Montel: 5:16

Absolutely. So what? In terms of the weather outlook for the, it's, it was very difficult to predict the weather beyond sort of 10 days or accurately at any rate. But for the coming weeks and months, maybe the summer period. What, what does, what are the weather forecast is saying?

Eylert Ellefsen, Analyst, Energy Quantified: 5:31

I think, I haven't studied the seasonal outlook so closely. But I think in general, we will get the situation now during the summer where if you think of those region Noal North Sweden North and Norway North. We'll have we'll see a curve that will be somewhat below normal. Because there is a hydrological deficit at the moment while in southern Norway. I think the swar curve will be very close to the normal curve as I see it. So a normal yeah. Quite normalized situation there. So no drama. No drama. No. And particularly the difference from last year when we had a very strong surplus in the north and strong price differences between Southern and and the northern areas across New Pole. So we don't, we'll see. I expect then a situation this summer with a more moderate. Price differences compared to last year. This is huge, a huge change a huge change in the situation.

Richard Sverrisson, Editor-in-Chief, Montel: 6:26

Is there a risk, do you think that Nordic power prices could rise above German levels later this summer to attract imports? Like for example, we saw in 2018.

Eylert Ellefsen, Analyst, Energy Quantified: 6:36

Now I cannot see that at the moment that okay, if it gets extremely dry, of course, but this will take a times, take some time. But I would say the. Q3, 2021. That was so extremely dry in Norway. And in particular southern Norway. This situation will, if this happened once more we will see maybe imports towards end of Q3. In a very dry scenario. I would say put it like this, but an extraordinary scenario. Yeah. It must be an extraordinary situation.

Richard Sverrisson, Editor-in-Chief, Montel: 7:07

Yeah. There was a lot of snow in the mountains in southern Norway this winter, and less so in the north, but. Spot prices remain much lower in the north, particularly in Norway. How long do you think this would continue?

Eylert Ellefsen, Analyst, Energy Quantified: 7:19

Yeah, I see that the last couple, the last days. A bit strange when you have this huge price difference in all three. A two. That means that the prices in northern Norway are much lower than in northern Sweden. I think it has something to do with some transmission outages. But I expect that, 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. I don't think that price difference will remain so long.

Richard Sverrisson, Editor-in-Chief, Montel: 7:55

So that's likely that the price likely to increase in northern to, to almost an equivalent level in. To, to northern Sweden?

Eylert Ellefsen, Analyst, Energy Quantified: 8:02

Yeah, I think so. So then the price difference, Northern Norway, Northern Sweden, not on Northern Norway, Southern Norway. Will decrease. I think so,

Richard Sverrisson, Editor-in-Chief, Montel: 8:09

but for that reason, because they're, yeah. More on a par with their northern, the northern region generally. Now moving on to other parts of the Nordic region. Last week on this pod we discussed the situation in Finland. Oculto three started commercial operations. So in April, as we discussed last week how has this affected prices in Sweden and Finland?

Eylert Ellefsen, Analyst, Energy Quantified: 8:29

Yeah, we have seen we have seen some periods combinate when we have strong wind power in Finland and not on Sweden. We see certainly negative prices in Finland. But it's not all, it's not only because of cul you need, a strong wind power in addition. But the, with the increased wind power capacity in Finland, we see this more and more orphan and prices in Finland and northern Sweden depends even more now I'll say variations with the wind power, it's even more, let's say, significant than earlier. And I think also we'll see an increased wind power capacity in northern Sweden. This year. So I made a graph for that with the increased export. Conditions or export volumes from northern Sweden and Finland because of the increased wind power. So what was your, what was the conclusion there? That will be the, by normal conditions? The power balance will be stronger, that we will have more power surplus in northern Sweden plus Finland than last year.

Richard Sverrisson, Editor-in-Chief, Montel: 9:33

Okay. Interesting. And, but, And obviously Norway lags behind here.

Eylert Ellefsen, Analyst, Energy Quantified: 9:37

Yeah, there is no wind power. The more wind power in the pipeline as I can see it is more on the negative. There, there are more closure, so wind power in the pipeline in Norway. So that's a quite different situation,

Richard Sverrisson, Editor-in-Chief, Montel: 9:49

very different situation between the Nordic countries there. Now if we can talk a little bit about demand. Now industrial demand fell a lot in the energy crisis. I mean you had the COVID and then the energy crisis with the high prices. Do you think that this the demand will come back slowly or could come back more rapidly?

Eylert Ellefsen, Analyst, Energy Quantified: 10:08

I don't must admit, I don't follow the, all this the industrial sector so well. But it seems the return has been slower than expected. But now it's okay. We had this energy crisis and electricity prices are still high, much higher than what we're used to. But not that extreme that we saw last year. So I still, it's. I think the electricity prices will still reduce the return of the industrial demand.

Richard Sverrisson, Editor-in-Chief, Montel: 10:37

Yeah. So that would still, it'll be a slow return. Yeah. Yeah, I think so. So no, there's no sort of return to pre COVID times as you see it in terms of,

Eylert Ellefsen, Analyst, Energy Quantified: 10:47

no, I don't think so. And that's also, we can see that the power balance in the Nordic region this year by, if it had been normal hydropower and normal consumption by which we are seeing now the surplus is around 60 tet hours. Partly because of reduced demand. And this surplus I made this long-term view a couple of months ago, and this surplus will be slowly reduced in the years to come because of increased demand. And not and it depends on how fast more production will come online. But I think in general, we have now a max export volume from the Nordic area. Think that we slowly reduced the years to come.

Richard Sverrisson, Editor-in-Chief, Montel: 11:26

Some countries, especially Finland, you've seen some forecasts of very bullish demand growth. Do you share this view? Where do you think demand growth would come?

Eylert Ellefsen, Analyst, Energy Quantified: 11:34

It must I am not really sure how this the different then you have to study what will happen year for year in different countries. There are so many forecasts and so many messages about what will happen. My I think there will we have to rate the real strong increase in Nordic demand will be when you have production of hydrogen, but that requires even more. Offshore wind power it looks like. And towards 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.

Richard Sverrisson, Editor-in-Chief, Montel: 12:11

So between 2030 and 2040 Yeah, we see a strong boost. Yeah. As green hydrogen comes onto. Yeah, into production anyway. What happens with that hydrogen? It was another interesting matter, but that, that's something else. That's another topic, I think for discussion that I let, but if we then turn our attention further, the south I know you look at what's happening in the Alps and in France. What's the current situation though? We, last year we saw, so quite. Disturbing pictures of depleted reservoirs of the river Poe at very low levels. And also you had calling issues at at, in France. 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. What's the current situation Eylert?

Eylert Ellefsen, Analyst, Energy Quantified: 12:53

The current situation is that it has been strongly, let's say improved compared to last year. I think. If we think of hydropower situation, it's been nearly normalized. In France, for example in the Alps you have Switzerland is a bit lower than normal. In their hydrological balance. But I think Italy, even Italy, seem now to be close to a normalized situation. But I must say, when I follow the official data it's interesting every week to see the development in this countries. But I think Italy has really recovered at least in the northern area where you have most of the hydropower plants. And but when you had this flooding situation, this was more on the in the lowland. So it was not so extreme then in the ALP region, but it has had a normalized more normalized precipitation in the Italian Alps too. I've been focused mainly then on what are the outlooks for France and the river flows and the cooling situation for nuclear plants. And currently these days there are very strong precipitation for France. So maybe we'll see an even better situation next week. But the river flow as it is currently a bit better than last year, but it varies between the rivers. In France, for example, I follow the Grand Valley. Where you have the plants Saint Alban and Stan, one of the largest plants. The give flow there is higher than last year. Okay. And and then the outlooks then. For July seemed to be still a hot summer warning. Maybe two degrees above normal, nearly as last July, but there are forecasted more rainfall, so there will be more rain. During seemed to be from the forecast this July compared to last July, because last July was totally dry. So then it became so extreme, and then August we had so much reduction on nuclear plants. So I think they. At the moment the production my forecast is around let's say 30 30 to gigawatt production in the nuclear plants in France. When we last summer had down to 22 at the lowest during August. So I think, so

Richard Sverrisson, Editor-in-Chief, Montel: 15:11

that's almost 50% increase in availability, you think? Yeah. Due to the weather conditions.

Eylert Ellefsen, Analyst, Energy Quantified: 15:15

Yeah. I think currently the outlooks are not that bad. That's my, let's say conclusion. It's still a hot summer forecast, but more precipitation and river flows seem to be on a higher level. And at least the Hydro Reserv reservoir are much higher in particular in France then,

Richard Sverrisson, Editor-in-Chief, Montel: 15:33

and this is due to the increased rainfall that we've seen in current weeks and the forecast of more precipitation Yeah. In the weeks to come.

Eylert Ellefsen, Analyst, Energy Quantified: 15:40

And I think also saving of water in the reservoir for the winter. So they have to make sure that they have let's say if when it comes to the winter. I think that means more. It's more important now than it was before the energy crisis.

Richard Sverrisson, Editor-in-Chief, Montel: 15:56

Yeah, absolutely.'cause the nuclear availability in France is obviously a massive driver, not only for French prices, but the whole of the region. And so the market participants and from all over the continent and beyond are looking at what's happening in France. So they, there'll be some relief to hear that July and August will not be of the July and August. 2022 will not be repeated.

Eylert Ellefsen, Analyst, Energy Quantified: 16:18

I don't I can tell my, I, I'm estimating then July 1st August, everything can happen of course, but outlooks for July looks better. Okay. Yeah. Let's put it that way. And yeah, I think, this is something I've been following so closely in every this weekly webinar. You have your weekly webinar. Yeah. And I always show this curve for the river flow in some rivers in France because but there are some rivers in the northern area towards Belgium. They are on shore and Kano nukes, their flows there are quite low. In the Rome Valley a bit better than still. Some regions are are very low as I told you, ano, and they seem to be facing a difficult summer.

Richard Sverrisson, Editor-in-Chief, Montel: 17:02

Okay, so you got San Alba and Tristan that. Seemed to be okay, but the ones in the north could face some issues. Yeah. Seems like chu and Katano was it? Katano? Yeah. Interesting. And I, it's interesting also that in the Nordic region, I know earlier this week there were instances of very warm sea seawater affecting cooling issues as well. Do what? Is this something that could crop up more and more Eylert?

Eylert Ellefsen, Analyst, Energy Quantified: 17:27

Yeah. But this is if the river flow is low, then the water temperature increases more rapidly. So more water it doesn't then the water is not so hot so fast. That's the simple regulation there. But there's not so many nuclear plants that are cooled from seawater, like in Sweden. Okay. There's, I think this especially Swedish way to do it.

Richard Sverrisson, Editor-in-Chief, Montel: 17:47

I think it's gr graveling. Isn't that maybe on Northern French coast? Ah, be all plants. There, there are so many of those. Exactly. Exactly. So that, but that's interesting. But if we return to the Alps eh, and it was quite, you say the reservoir levels are quite healthy there now. But that. Precipitation was quite low over the winter, wasn't it in the Alps? Or maybe there's a lot of regional variation?

Eylert Ellefsen, Analyst, Energy Quantified: 18:10

It started very low but from March and further out the precipitation has been quite normal. So we can see that, for example you can see that on the production curves too, from France. When from start of April, the hydropower production increased because you have more inflows to the river plants mainly. So that was a very typical sign of improved situation. But starting from New Year the snow levels were very low. But there was an improvement gradually during let's say Q2.

Richard Sverrisson, Editor-in-Chief, Montel: 18:43

And as you're saying that the situation has normalized as well, I think, and I think that will come as a welcome relief to, to to many yeah. As I said, and I think, people will be relieved or there was concerns that you'd see, repeats of, going far back as 2003, 2006, the, and other more recent dry years. But I think if that's not gonna be the case, certainly in July, then that's that's the easy some supplied concerns ahead of the autumn in the winter.

Eylert Ellefsen, Analyst, Energy Quantified: 19:08

And yes, but still I think if you get this hot scenario precipitation will disappear. It will be more evaporation. So then you have but my forecast is okay, you can accept quite a hot july without any strong problems. But then outlooks then for August can be worse if you have a, another rather dry july.

Richard Sverrisson, Editor-in-Chief, Montel: 19:32

Eylert. It's all in, it all hangs in the weather, exactly. So thank you very much for being a guest on the Montel Weekly podcast.