Friday, 15 October 2021
In the past two weeks, the Norwegian hydropower reservoir levels continue to increase after a period of low decreasing levels throughout the summer and spring periods. According to data from NVE, the filling rate in Week 40 rose by 1.6% to 66.4% amid increasing precipitation levels in the region.
This year, the hydro reservoir levels in Norway, Sweden, and Finland were below the five-year average level during the spring and summer periods. This was also the case in the rest of Europe that experienced lower than normal reservoir levels.
Last week (Week 40), Norwegian hydropower reservoir levels increased by 1.6% from 64.8% in Week 39 to 66.4%. According to data from NVE, Northern Norway (NO4) had the highest reservoir filling at 81.9% while Southernwestern Norway (NO2) had the lowest filling at 56.3%. However, despite this increase, current levels were still lower than the levels witnessed in 2020 by 28% and Nordic reservoir levels are about 20 TWh below the normal level. The median filling rate in Week 40 between 2001 and 2020 was 82.8%.
This reduction in reservoir levels has been mainly attributed to dry weather conditions and lower than normal precipitation levels in Norway with the rest of Europe also experiencing lower than normal inflow levels.
This year has also witnessed lower than normal wind speeds with wind production in the Nordic region decreasing by 18% in Q2 of 2021 compared to the norm in Norway. The tight hydro balance and lower wind production had a bullish impact on prices for GOs in general including Nordic Hydro GOs, lifting prices to more than 1 Euros/MWh in September 2021.
Precipitation is forecasted in Week 42 to increase to 39% above the normal rate with inflow and hydro production rates also forecasted to increase by 23% and 8% above the normal rate which could provide further support to the Nordic hydro balance.
Electricity prices in Norway and the rest of Europe have been significantly high this year attributed to increasing fuel prices (coal and gas) combined with surging carbon emission prices (EUAs). On Wednesday (13 October 2021), the electricity price in southern Norway reached its highest peak thus far at NOK 1.29/kWh according to Nordpool. These high prices potentially caused power producers to produce at normal levels for exports despite the low reservoir filling rates.
At the end of September, the Norwegian network operator Statnett had sent out a market announcement stating that the power situation in the country had changed from "normal" to "tight" in parts of the price areas NO2 and NO5 in the southern part of Norway. In their statement, the network operator also mentioned that the power situation had changed from a green to a yellow level based on low inflow and negative reservoir development in those areas.
However while the power situation level in those areas has changed there is still some recovery time left and in a statement to E24 in September, Statnett's communications director Henrik Glette said that "So far, the situation is not such that the company will implement measures" further adding that "this is a call to the power industry that this is a situation that can develop and they must show caution."
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