Drought Brings Adverse Effects on Energy: Higher Prices and Threats to the System

The drought observed in Greece over the past few years has had very negative consequences, ranging from primary production to wildfire exacerbation. However, there is another area that is adversely affected—energy and power systems. On Tuesday (May 20, 2025), during the announcement of DEH’s financial results, President and Managing Director George Stassis highlighted this issue. As he pointed out, water reserves at hydroelectric facilities are currently extremely low. Market analysts estimate these levels to be reduced by 14% compared to a year ago. Consequently, electricity production from hydroelectric sources decreased by 27% or 240 GWh during the first quarter of this year. Moreover, DEH does not anticipate any improvement for the remainder of 2025, which could enhance quantities. It’s worth noting that hydroelectric plants are critical units for the system, as they typically provide base power combined with problem-solving capabilities, like those needed after Spain’s recent blackout. Nevertheless, the most pressing issue right now is avoiding a spike in electricity prices, similar to last summer’s surge. Due to insufficient hydroelectric production, more expensive gas units are forced to work harder. For instance, during this period, hydroelectric plants operate at only about 3% of total production, while gas accounts for 30-35%. A warning bell rang yesterday, May 21, when the price on the day-ahead market rose to 155 euros/MWh for the first time since February. Additionally, international news is discouraging, as European natural gas prices increased again yesterday from 35 to 37.5 euros.