Fifth heatwave sends European power prices surging

A fifth summer heatwave gripping Europe has driven electricity prices sharply higher across the continent, with French and German day-ahead power contracts jumping more than 20% on Tuesday as extreme heat simultaneously curbs generation capacity and fuels cooling demand.

Nuclear and Wind Output Under Pressure

French day-ahead power prices spiked 21.8% to €142.5 per megawatt-hour, while the equivalent German contract rose 22.8% to €138.50/MWh, according to LSEG data reported by Reuters. French nuclear output is expected to be curtailed by 7.3 gigawatts at Wednesday's midday peak — about 12% of the entire nuclear fleet — as high river water temperatures force EDF to reduce or shut down reactors, EDF data showed.marketscreener+1

France relies on nuclear power for roughly 70% of its electricity production. Two reactors are expected to be fully offline due to high water temperatures, while four additional units face planned limitations. French regulations limit how much heat plants can discharge into rivers for environmental protection, forcing output cuts when water temperatures rise.marketscreener

Meanwhile, German wind output is forecast to drop by 8.1 GW to just 4.7 GW — roughly 60% below seasonal averages — as the high-pressure system brings still air across the region.marketscreener

Evening Peaks and Cross-Border Ripple Effects

Intraday prices are surging even higher during evening hours. Prices are set to peak at around €228 per megawatt-hour in Germany and €229 in France between 8 p.m. and 9 p.m. local time, when solar generation falls and cooling demand picks up, according to EPEX Spot data cited by Bloomberg.bloomberg

"The heatwave is expected to be at its highest from Wednesday to Friday in France, so I'd expect significant shutdowns starting from Tuesday or Wednesday and they could last up until the start of next week," Kpler analyst Alessandro Armenia told Reuters. The nuclear shortfall also ripples across borders, as nuclear exports tend to be cheaper than the coal and gas plants that mostly set prices in neighboring countries, Armenia added.marketscreener

Broader Crisis Deepens

The heatwave is the fifth to hit Europe this summer, pushing average temperatures in France to 7.4 degrees Celsius above seasonal norms. Meteo-France forecasts temperatures reaching 35 to 39 degrees Celsius in most regions on Thursday and Friday before potentially easing over the weekend.aol

Beyond power markets, Europe's rivers are under severe strain. Water levels at Kaub on the Rhine — a key chokepoint for shipping to southern Germany and Switzerland — dropped to 16 centimeters on August 10, with forecasts showing a possible fall to just 4 centimeters by August 14, according to the Straits Times. Germany's growing reliance on wind and solar means that when wind speeds drop, the country must ramp up increasingly costly gas turbines, with prices further pressured by ongoing disruptions in the Strait of Hormuz.straitstimes+1