Energy prices rise in the Netherlands due to low water levels

Due to the ongoing drought, there is a shortage of cooling water for European power plants. This has led to increasing energy prices in the Netherlands. 

Drought affects Dutch energy prices

In recent weeks, energy prices have risen significantly. In July, a megawatt-hour of electricity cost around 80 euros in the Netherlands, and now it is sitting at between 150 and 200 euros per megawatt-hour, reports NOS.

This will likely have a bigger impact on residents with dynamic energy contracts, as their energy bills fluctuate with the market, unlike those with fixed contracts. While energy prices were already on the rise due to the conflict in the Middle East, the ongoing drought is now also affecting our energy bills. 

Due to high temperatures, low water levels in the rivers and increasing demand for water, the Netherlands and many other European countries have been struggling with a severe drought for several weeks. Power plants in Europe are now feeling the crunch. 

Low water levels spell trouble for European power plants

The water shortage's effect on energy generation is twofold: not only can power plants use less or no cooling water, but they are also no longer allowed to discharge used cooling water that would raise river temperatures. 

Cooling water is used to capture excess heat released during electricity generation. After the water is used, it is returned to the rivers, warmed. However, because of the low water level, there is not enough cooling water and adding warm water to the already warming rivers would cause issues.

European regulations therefore forbid the discharge of heated water into rivers during such situations. "That is to protect the ecosystems, the plants and fish. But also drinking water: we take that from the river and we don't want it to be too warm," assistant professor at TU Delft Jasper Verschuur told NOS.  

So far, this is the case in France, Romania, Hungary and Serbia, which means several countries are looking for alternative energy sources. The high demand and low supply lead to higher prices, which also affect the Netherlands. 

Dutch energy production not yet scaled down

Currently, water levels and temperatures in the Netherlands have not yet reached levels that would require Dutch energy production to be scaled down. This could soon change if water temperatures rise just a few degrees (above 28 degrees celsius). 

"In the Netherlands, about half of the major power plants are located along the coast. They extract saltwater and discharge it deep into the sea. That is less vulnerable. The other half are located along rivers, and those are vulnerable to these kinds of situations. Power plants along the Meuse, in particular, are especially vulnerable," explains Verschuur.

With all-time low water levels in the Rhine and several Dutch waterways being closed to shipping due to low water levels, not only is energy production being affected. From animal feed to construction materials, businesses in various industries that rely on shipping by water are now having to look at other pricier transport methods, which could see prices of other products and services rise in the coming weeks.