Record low reservoir levels at Norwegian hydropower plants drive up electricity prices

Norwegian hydropower plants are draining reservoirs at record-low levels, driving up electricity prices for domestic consumers while exporting power at high prices to Europe. The Norwegian Water Resources and Energy Directorate (NVE) reported that reservoir levels have fallen to the lowest point in eight years, matching only two previous years since 2000.

In the past week, electricity prices rose across southern and central Norway, excluding the far north, due to low wind power production in continental Europe and reduced hydropower inflow. The NVE stated that increased hydropower output contributed to a second consecutive week of declining reservoir levels.

Southern Norway saw electricity prices increase by over 20% last week, boosting revenue for power companies but accelerating the depletion of reservoirs needed for winter supply. Current warm and dry conditions are preventing replenishment, and weather forecasts offer little hope of significant rainfall in the south. The NVE expects precipitation and water inflow to remain at just 45% of normal levels in both the past and current weeks.

Reservoir levels are now lower than at any point since 2018, and comparable only to 2006 for this time of year. The NVE warns that low reservoir levels and prolonged dry periods will likely keep electricity prices elevated through the summer and into autumn, with winter supply dependent on autumn rainfall.

High European electricity prices have driven Norwegian plants to operate at full capacity, depleting reservoirs that would otherwise store water for winter use.