Uniper Warns on German Power Output as Rhine River Dries Up

·3 min read

(Bloomberg) -- Uniper SE warned it may have to cut output at two key coal-fired power plants in Germany as the company struggles to get fuel supplies along the Rhine River, exacerbating an energy crunch that has threatened to push the continent’s largest economies into recession.

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Water levels on the Rhine have fallen so low that the river may effectively close soon. There could be “irregular operation” at Uniper’s 510-megawatt Staudinger-5 plant until early September and at 1,000 megawatt Datteln-4 because of limited volumes of coal on site.

German power for next year climbed to a record 410.57 euros ($418.31) per megawatt-hour on the European Energy Exchange on Thursday. Futures for next month eased, though they’re still trading about eight times higher than usual for the time of year.

Europe is facing its worst energy crisis in decades as Russia curbs natural gas supplies amid heightened tensions over its invasion of Ukraine. The restriction of movement on one of the continent’s most important rivers, compounded by climate change, could disrupt the flow of everything from fuel to chemicals as nations rush to stockpile fuel ahead of winter.

Last month, Germany agreed to provide a 17 billion-euro rescue package for struggling utility Uniper in its biggest move to date to prevent the collapse of its energy market in the wake of Russia’s moves to slash gas deliveries.

German power plants on the Rhine at Mannheim and Karlsruhe, operated by Grosskraftwerk Mannheim AG and EnBW AG, have previously struggled to source coal because of the shallow water, though generation hasn’t been affected.

EnBW has been building up stocks at its plants in advance and currently has a high inventory, according to a spokesperson. The company’s facilities on the Rhine and Neckar rivers can be supplied with coal by ship and by rail.

Utility Steag GmbH said it already has coal on site, especially at places that it needs to deliver by barge.

Coal will be more vital than ever to Europe’s energy security this winter due to the stand-off with Russia over fuel. Germany has already triggered two stages of its gas emergency plan and could enact the last step if there’s a clear deterioration in the situation.

Read more: Don’t Expect Nord Stream Gas Revival as Turbine Blaming Drags On

The situation isn’t unique to Germany, as the Rhine snakes some 800 miles (1,288 kilometers) from Switzerland to the North Sea. Low river levels are also affecting nuclear plants in France. A heat wave is pushing up water temperatures, limiting the ability of Electricite de France SA to cool some facilities.

The French utility said power stations on the Rhone and Garonne rivers will likely produce less electricity in the coming days, but there will be a minimum level of output to keep the grid stable.

Power plants typically need cooling water that’s usually brought in from a nearby river or the sea before it’s returned, often at a higher temperature than when it came in. There are limits on how warm the water can be in order to protect fish and other aquatic life.

French power and coal futures for next year have risen to record levels in recent days.

Glencore Plc, the world’s top coal shipper and one of the biggest winners from the supply crunch as demand for the fossil fuel surges, said it’s ready to help.

“We do obviously see there’s an energy crisis,” said Glencore Chief Executive Officer Gary Nagle. “We’re trying to assist where we can, to ensure that we can provide security of supply through any forms of energy that we market that we will help countries through the difficult times.”

(Adds detail on Datteln-4 in second paragraph.)

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