How to track European power system stress during heatwave

LITTLETON, Colorado, June 26 (Reuters) – Scores of cities across Europe are sweltering under record temperatures that are boosting demand for cooling systems while forcing utilities to scale back power production to avert outages.

The double whammy of higher electricity demand and lower supply is ​placing unprecedented strain on the region’s power grids that are already struggling to accommodate rising electricity use from data centers, EVs and ‌heat pumps.

Here is a breakdown on how to track the fallout from the ongoing heatwave across Europe’s power systems, where power prices and generation mixes remain in constant flux as a result of the stress.

Many of Europe’s largest power markets have day-ahead and intraday prices which provide useful clues on expected system conditions, and reveal several things at once.

High and rising prices indicate ​that demand is expected to remain strong while supply is set to remain tight.

Rising power prices can also reveal which power source is setting the ​marginal price for production in key markets, thanks to the so-called merit order pricing system.

In most European power markets, the ⁠most expensive power source needed to meet demand sets the price for the whole market, which is often gas-fired plants but can also be coal, nuclear and ​hydro power systems.

High day-ahead prices can therefore indicate which technology is setting the marginal price in which market, and what fuel and carbon costs will feed through each ​system as power firms adjust output mixes to balance market needs.

Subscribers to market data providers such as LSEG can track power prices in the energy and power applications, while websites such as EUenergy.live, opens new tab and electricitymaps.com, opens new tab also provide recent data on prices and generation mixes.

Imports and exports also play a key role in Europe’s power markets, with countries such as France and Norway normally large ​electricity suppliers to neighboring nations.

Again, the likes of LSEG have real-time data on cross-border power trading available to subscribers, while the International Energy Agency also provides tracking ​tools to measure the direction and scale of trade among key nations.

Unexpected outages in key exporter nations can have far-reaching repercussions throughout Europe, and can trigger a widespread rise in regional ‌prices if ⁠normally large and persistent exporters cut back on supplies for extended periods.

Power market trackers must also stay on top of grid operator notices, which inform market participants of potential network issues.

Common heat-related alerts include voltage control problems, which can arise when demand for air conditioners peaks just as supply flowing through key infrastructure such as transmission lines dips due to heat stress.

Grid operators also use alerts to call for reduced consumption among key power users or during particular time periods, and so can ​act as a further signal on the ​health of key networks.

France’s main operator ⁠of nuclear plants issued a notice this week warning that high temperatures have reduced the supply of river water that can be used to cool its reactors, forcing them to reduce output.

The United Kingdom’s grid operator also issued a rare electricity margin ​notice this week, warning that supply may be lower than normal just as total system demand pushes higher.

With extreme heat ​warnings in effect through ⁠the rest of this week in the UK, France and other parts of Europe, further stress on regional power grids is likely that can impact traders, utilities and businesses alike.

For those watching closely, the signals are already there: in rising prices, shifting power flows, changing generation mixes, and alerts from grid operators.

The opinions expressed here are those of ⁠the author, a ​columnist for Reuters.

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