Water constraints on European power supply under climate change: impacts on electricity prices

Summary

Recent warm, dry summers showed the vulnerability of the European power sector to low water availability and high river temperatures. Climate change is likely to impact electricity supply, in terms of both water availability for hydropower generation and cooling water usage for thermoelectric power production. Here, we show the impacts of climate change and changes in water availability and water temperature on European electricity production and prices. Using simulations of daily river flows and water temperatures under future climate (2031–2060) in power production models, we show declines in both thermoelectric and hydropower generating potential for most parts of Europe, except for the most northern countries. Based on changes in power production potentials, we assess the cost-optimal use of power plants for each European country by taking electricity import and export constraints into account. Higher wholesale prices are projected on a mean annual basis for most European countries (except for Sweden and Norway), with strongest increases for Slovenia (12–15%), Bulgaria (21–23%) and Romania (31–32% for 2031–2060), where limitations in water availability mainly affect power plants with low production costs. Considering the long design life of power plant infrastructures, short-term adaptation strategies are highly recommended to prevent undesired distributional and allocative effects.