Nuclear plants on life support from river
The Danube River, which flows through ten European nations and is crucial for power generation, shipping and agriculture, is facing historic water shortages. Hungary's Paks nuclear power plant, which supplies nearly half of the country's electricity, has had to cut its operations because the Danube no longer provides sufficient water to maintain cooling systems. This plant is among the largest in the region and is essential to the country’s energy stability. With the river's water levels dropping to dangerous lows, the plant is expected to shut down completely in the near future due to safety concerns.
In neighboring Romania, the Cernavoda nuclear power station has also been forced to shut down one of its reactors for the same reason. A second reactor is expected to follow suit, further reducing the country's energy output. Serbia, too, is experiencing similar challenges, with the Kostolac coal-fired power plant curbing electricity production as the Danube's low water levels impair its ability to cool effectively. With local supply disrupted, these countries are looking to import electricity, but energy costs are soaring during heatwaves as neighboring nations also grapple with the same crisis. The scarcity of available cooling water is forcing energy operators to prioritize system stability over full output, leading to unpredictable power availability.
Ships stuck, grain prices fall, trucks queue
The transport sector is also suffering. Along the Danube, barges are stuck in shallow waters and unable to reach inland ports. Cezar Gheorghe, a Romanian grain market analyst at AGRIColumn, explains that only the ports near the Black Sea are still functional. He adds that buyers may reduce the prices offered to farmers as supply chains slow down and alternative transport—like trucking—becomes necessary. However, trucking is an imperfect solution, as there may not be enough available trucks to meet the demand. The lack of river access forces farmers to either store their crops or sell at significantly discounted rates, further squeezing rural economies already burdened by rising costs.
The Rhine, one of Europe's most important waterways, is seeing similar disruptions. The Port of Rotterdam, a major gateway for goods into the continent, has reported a 10% drop in cargo movement between itself and the Rhine since early July. This decline is hitting chemical tankers, oil carriers and bulk cargo ships the hardest, as these vessels require greater water depth to operate. Container barges, by contrast, are less affected due to their lighter drafts. The reduced cargo capacity is causing delays at factories and warehouses, as goods arrive later than expected or not at all. Companies that rely on just-in-time delivery models are especially vulnerable to these supply chain interruptions.
Electricity profits take a plunge
The drought's economic impact is now visible in corporate earnings. Austrian energy company Verbund, which relies on hydropower for about 85% of its production, reported a 370 million euro loss in revenue during the first half of the year due to reduced water availability. This shortfall has significantly affected its financial performance compared to a typical year of normal river conditions. The company is now reevaluating its long-term strategies, as the reliability of hydropower as a consistent energy source is coming into question. With the Danube and other rivers providing less water, Verbund faces a dual challenge of maintaining operations and covering rising maintenance and cooling costs.
French utility EDF, a state-owned energy giant, also faces challenges. It has projected a 10% drop in profits by 2026, attributed to reduced electricity generation and lower market prices. The company's operations are affected by both the Rhine and Danube water shortages, which impact both cooling systems and hydropower capabilities. As a result, the financial strains are compounding across the energy sector, with ripple effects on economies throughout Europe. The rising cost of energy imports and the need for alternative generation methods are pushing up operational expenses for companies like EDF, which are already struggling with aging infrastructure and regulatory pressures.
The crisis is not limited to individual countries or sectors but is unfolding simultaneously across the continent. Governments are urging citizens to conserve energy as power systems strain under the weight of high demand and reduced supply. Farmers, businesses and industries are all adjusting to a new reality in which the once-reliable rivers are no longer a stable source of energy, transport or water. Scientists have long warned that extreme weather events would become more frequent as global temperatures rise, but now those warnings are being felt in concrete, real-world impacts. As Europe grapples with the immediate consequences, the long-term implications for energy planning, infrastructure investment and climate adaptation are becoming increasingly urgent.
Hungary's Paks nuclear power plant, which sits on the Danube about 60 miles south of Budapest, is generating only about half of its normal output, with three of its four reactors currently offline. The plant is on the brink of completely shutting down as the drought in southeast Europe, now more than three months long, shows no immediate signs of abating. Unlike nuclear plants in the U.S., U.K., Germany and France, which often rely on cooling towers, Paks was built to directly draw water from the Danube, a river once considered too mighty to run dry. Prime Minister Péter Magyar, who took office three months ago, has been on site at the plant, acknowledging the gravity of the situation while calling for national unity to conserve energy. He noted that a cold front is expected to move in on Friday, potentially offering relief, though temperatures in Budapest are forecast to remain above 100 degrees Fahrenheit through Thursday. To offset the power loss, Hungary has nearly doubled its electricity imports from neighboring countries, using its highly interconnected electricity network. The government is currently absorbing the added costs to avoid passing them to consumers, but it is urging households to avoid using energy-intensive appliances during peak hours to ease grid pressure.
Hungary is the only EU country where households pay less for electricity than industry. The country’s nuclear crisis could spark a major overhaul of its electricity market, prompting it to seek help from Ukraine. With the Danube at historic lows on 29 July, Hungary’s Paks nuclear plant began to power down, causing nighttime prices to surge as temperatures above 40°C kept power demand high. “By that wall, you can see the water gauge that determines the current situation,” said Prime Minister Péter Magyar on a Wednesday site visit, noting that the plant could be shut down entirely if water levels continue to fall. Hungary’s energy market is defined by a constant fight for low energy bills, a phenomenon known as Rezsiharc. Zsuzsanna Pató, a principal advisor at the think tank Regulatory Assistance Project, said the loss of the Paks power is an important moment for Hungary. Magyar said the “whole country” was watching the nuclear power plant. But they are also watching electricity prices, and until rain falls upstream, Hungarian wholesale prices vary wildly throughout the day. At noon, they are zero because solar panels dominate the market. At night, they surge towards €500 per megawatt-hour. “People might wonder how come they pay the same price throughout,” the senior Hungarian energy expert said. One Hungarian diplomat, speaking frankly, told Euractiv, “it’s clear that habits will need to change.” “Currently, the tariffs don’t incentivise using less electricity at night,” the diplomat said. Faced with the ongoing crisis, Hungary must count on the electricity solidarity of its neighbours. Thanks to Soviet-era cross-border cables, it can make up the shortfall left by its single (now-idling) nuclear power plant. It comes at a cost. Government officials predict spending between €275 million and €550 million on hundreds of gigawatt-hours (GWh) needed to keep the lights on each night. Much of that electricity is coming from neighbouring Ukraine. In the last week of July, Kyiv supplied the second-largest amount of electricity to the region after Poland, with its net exports totalling 61 GWh despite being locked in a hot war and being limited to exporting at most 900 MW.