1 00:00:02,480 --> 00:00:10,200 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. I'm Stephen Carroll and 2 00:00:10,240 --> 00:00:12,479 Speaker 1: this is Here's Why, where we take one news story 3 00:00:12,520 --> 00:00:14,560 Speaker 1: and explain it in just a few minutes with our 4 00:00:14,560 --> 00:00:16,000 Speaker 1: experts here at Bloomberg. 5 00:00:19,239 --> 00:00:22,400 Speaker 2: There's a heat wave, if you haven't noticed, gripping Western 6 00:00:22,480 --> 00:00:26,840 Speaker 2: Europe and we are anticipating more dangerously hot and humid conditions. 7 00:00:26,840 --> 00:00:29,440 Speaker 2: We're breaking records across the continent. 8 00:00:29,640 --> 00:00:30,680 Speaker 1: It's pretty severe. 9 00:00:30,840 --> 00:00:35,120 Speaker 3: I mean we're seeing temperature records falling and you know 10 00:00:35,159 --> 00:00:38,040 Speaker 3: it's not even at its peep yet. This is only 11 00:00:38,080 --> 00:00:40,360 Speaker 3: the second ever red heat worn in for the UK. 12 00:00:40,880 --> 00:00:45,680 Speaker 4: We're seeing training cancelations and delays really across the continent 13 00:00:46,040 --> 00:00:49,040 Speaker 4: here in the UK, France and the Netherlands. It's just 14 00:00:49,120 --> 00:00:51,800 Speaker 4: not built, wasn't hill for these types of temperatures, and 15 00:00:52,200 --> 00:00:53,199 Speaker 4: not these temperatures this. 16 00:00:53,200 --> 00:00:56,040 Speaker 1: Early Western Europe has been baking in a heat wave 17 00:00:56,040 --> 00:00:59,960 Speaker 1: that's pushed temperatures to dangerous levels, triggering extreme heat worn 18 00:01:00,240 --> 00:01:04,080 Speaker 1: from authorities in France, Germany, the UK and elsewhere. The 19 00:01:04,120 --> 00:01:08,000 Speaker 1: scorching weather has driven record demand for cooling as households 20 00:01:08,040 --> 00:01:11,280 Speaker 1: and businesses rely more on air conditioning, but it's also 21 00:01:11,360 --> 00:01:15,959 Speaker 1: added other strains on electricity supplies. Here's why heat waves 22 00:01:16,120 --> 00:01:23,600 Speaker 1: spell trouble for power networks. Our power and renewables reporter 23 00:01:23,680 --> 00:01:26,399 Speaker 1: Aiman Farhat joins us now for more, and then let's 24 00:01:26,440 --> 00:01:29,200 Speaker 1: talk about the demand side first. So in northern Europe, 25 00:01:29,319 --> 00:01:32,200 Speaker 1: relatively few homes have air conditioning, but it is becoming 26 00:01:32,240 --> 00:01:35,400 Speaker 1: more common. How much does demand for power go up 27 00:01:35,640 --> 00:01:36,680 Speaker 1: when the weather gets hotter? 28 00:01:37,360 --> 00:01:39,759 Speaker 3: Hey, right, when you look at Europe, I mean, France 29 00:01:39,840 --> 00:01:41,280 Speaker 3: is kind of the middle ground where when you come 30 00:01:41,319 --> 00:01:43,520 Speaker 3: to the south of France than south of that Spain Italy, 31 00:01:43,560 --> 00:01:45,319 Speaker 3: you do have quite a bit of a conditioning, but 32 00:01:45,319 --> 00:01:47,800 Speaker 3: once you're in northern Europe you're right, which still quite limited. 33 00:01:48,040 --> 00:01:49,960 Speaker 3: That being said, we're looking at France, which is really 34 00:01:50,000 --> 00:01:53,080 Speaker 3: where the heat has been centered in Europe, and powder 35 00:01:53,080 --> 00:01:55,040 Speaker 3: them on in the last few days is about up 36 00:01:55,040 --> 00:01:57,800 Speaker 3: fifteen percent on the evening peaks compared to kind of 37 00:01:57,800 --> 00:02:01,040 Speaker 3: a more normal summer week. I mean, are kind of 38 00:02:01,080 --> 00:02:02,960 Speaker 3: going to do almost crazy levels of talking about forty 39 00:02:02,960 --> 00:02:05,800 Speaker 3: four degrees in France, you know, reaching forty degrees in Paris. 40 00:02:05,840 --> 00:02:08,400 Speaker 3: So that really is what is driving those those peaks 41 00:02:08,400 --> 00:02:10,079 Speaker 3: in demand and that fifteen percent increase. 42 00:02:10,760 --> 00:02:13,000 Speaker 1: So what do high temperatures do then to the power 43 00:02:13,040 --> 00:02:16,400 Speaker 1: grids themselves. How resilient are networks in Europe to these 44 00:02:16,480 --> 00:02:17,640 Speaker 1: kinds of heat waves. 45 00:02:18,360 --> 00:02:19,799 Speaker 3: I mean, when you think about the grid itself, I 46 00:02:19,840 --> 00:02:22,880 Speaker 3: mean the physical infrastructure. You have these wires connecting power 47 00:02:23,160 --> 00:02:26,240 Speaker 3: you know, from your home to generation stations, you know, 48 00:02:26,280 --> 00:02:28,839 Speaker 3: across borders, and when it gets too hot, those power 49 00:02:28,880 --> 00:02:32,000 Speaker 3: lines start to sag, and grid operators have to think 50 00:02:32,000 --> 00:02:33,760 Speaker 3: about that and think about how much power they can 51 00:02:33,760 --> 00:02:36,520 Speaker 3: transport through the lines to kind of limit that happening, 52 00:02:36,560 --> 00:02:39,240 Speaker 3: because that can become dangerous, that cause blackouts. So that's 53 00:02:39,320 --> 00:02:41,520 Speaker 3: kind of one of the major impacts. But even more 54 00:02:41,560 --> 00:02:43,680 Speaker 3: than that when it comes to, for example, on the 55 00:02:43,720 --> 00:02:46,080 Speaker 3: generation side, which it kind of also fits into the grid. 56 00:02:46,360 --> 00:02:48,239 Speaker 3: In France, we have all these nuclear reactors and that 57 00:02:48,320 --> 00:02:51,239 Speaker 3: kind of underpins a lot of Europe's generation, especially in 58 00:02:51,240 --> 00:02:52,920 Speaker 3: the evenings when the sun is not shining or at 59 00:02:52,960 --> 00:02:55,480 Speaker 3: times with low wind. These nuclear reactors really are the 60 00:02:55,520 --> 00:02:58,280 Speaker 3: backbone of Europe's generation. And when it gets too hot, 61 00:02:58,400 --> 00:03:01,000 Speaker 3: the rivers that cool these reactors get too hot, so 62 00:03:01,000 --> 00:03:03,200 Speaker 3: you have to actually turn down or turn off the reactors, 63 00:03:03,400 --> 00:03:05,840 Speaker 3: and that is really what creates some stress on the 64 00:03:05,840 --> 00:03:07,400 Speaker 3: system and on the grid across Europe. 65 00:03:07,520 --> 00:03:10,120 Speaker 1: You mentioned renewables there as well. You think sony weather 66 00:03:10,280 --> 00:03:12,920 Speaker 1: is good for solar power for example, but is this 67 00:03:13,000 --> 00:03:15,480 Speaker 1: actually a good period for renewables generation. 68 00:03:15,919 --> 00:03:17,679 Speaker 3: Yeah, every year we're having kind of record levels of 69 00:03:17,760 --> 00:03:20,399 Speaker 3: solar power, but it always happens more in April and May. 70 00:03:20,600 --> 00:03:22,200 Speaker 3: This is kind of the peak solar period. You'd think 71 00:03:22,200 --> 00:03:24,519 Speaker 3: it would be during the summer, but actually solar panels 72 00:03:24,840 --> 00:03:27,760 Speaker 3: are slightly less efficient at high temperatures, so it's actually 73 00:03:27,760 --> 00:03:30,280 Speaker 3: more around when it's about twenty twenty two degrees that 74 00:03:30,320 --> 00:03:33,000 Speaker 3: they solar powers are at their maximum efficiency. Obviously, we've 75 00:03:33,040 --> 00:03:35,440 Speaker 3: had very sunny weather, so during the midday peaks, so 76 00:03:35,440 --> 00:03:37,880 Speaker 3: between maybe ten to three pm, you have very good 77 00:03:37,880 --> 00:03:41,000 Speaker 3: solar generation. But actually right now in the last kind 78 00:03:41,000 --> 00:03:43,400 Speaker 3: of week, we've also had very very low wind levels. 79 00:03:43,400 --> 00:03:46,360 Speaker 3: We're talking about maybe six month lows across some countries, 80 00:03:46,600 --> 00:03:49,520 Speaker 3: and that means that you know, renewable generation total is 81 00:03:49,520 --> 00:03:52,480 Speaker 3: actually down, and so gas new careactors and sometimes even 82 00:03:52,520 --> 00:03:53,960 Speaker 3: coal have to come in and fill the gap. 83 00:03:54,360 --> 00:03:57,960 Speaker 1: Can the grids cope with a surge in power generation? 84 00:03:58,040 --> 00:04:00,960 Speaker 1: I'm thinking about what led to the major blackout in 85 00:04:01,000 --> 00:04:04,080 Speaker 1: Spain and Portugal last year. Part of that was blamed 86 00:04:04,120 --> 00:04:07,960 Speaker 1: on the unstability that coming from renewables. Can grids actually 87 00:04:08,040 --> 00:04:10,800 Speaker 1: adapt to having this big change and energy mix. 88 00:04:10,960 --> 00:04:12,560 Speaker 3: When it comes to that that issue in Spain and 89 00:04:12,560 --> 00:04:14,160 Speaker 3: in any grid, you know, whether if you have a 90 00:04:14,160 --> 00:04:17,599 Speaker 3: surgeon generation or a dropping generation, that can cause issues 91 00:04:17,600 --> 00:04:19,200 Speaker 3: for the grid stability I mean right now. Actually a 92 00:04:19,240 --> 00:04:21,560 Speaker 3: very interesting dynamic which you haven't discussed, is actually the 93 00:04:21,600 --> 00:04:23,400 Speaker 3: World Cup as well. You know, we're having spikes and 94 00:04:23,440 --> 00:04:26,120 Speaker 3: power demand when people at halftime and at full time 95 00:04:26,160 --> 00:04:28,599 Speaker 3: and everyone gets up, puts their cattle up, opens their fridge, 96 00:04:28,720 --> 00:04:30,880 Speaker 3: and that can cause you know, a very sharp increase 97 00:04:30,880 --> 00:04:32,960 Speaker 3: in a very short period of time, which is exactly 98 00:04:33,000 --> 00:04:34,360 Speaker 3: what renewables also do. You know, you can have a 99 00:04:34,440 --> 00:04:37,279 Speaker 3: very sharp increase or decrease in generation as it's weather driven. 100 00:04:37,800 --> 00:04:40,360 Speaker 3: Grid are definitely becoming more resilient. Spain was a big 101 00:04:40,400 --> 00:04:43,080 Speaker 3: example of where that residency wasn't there, and now European 102 00:04:43,080 --> 00:04:45,440 Speaker 3: countries are definitely investing a lot in the last year 103 00:04:45,640 --> 00:04:47,640 Speaker 3: to make sure that isn't repeated this summer. 104 00:04:47,960 --> 00:04:50,680 Speaker 1: What does all of this mean for prices, because that's 105 00:04:50,680 --> 00:04:51,880 Speaker 1: an important factor too. 106 00:04:52,160 --> 00:04:54,080 Speaker 3: It's really interesting when you look at the power prices. 107 00:04:54,120 --> 00:04:56,400 Speaker 3: You know, we follow it on many different contracts. The 108 00:04:56,480 --> 00:04:59,039 Speaker 3: day ahead is basically the kind of the daily power price, 109 00:04:59,279 --> 00:05:01,239 Speaker 3: and the power price for today actually went in France 110 00:05:01,279 --> 00:05:03,920 Speaker 3: to its highest level is twenty twenty two, so it's 111 00:05:03,960 --> 00:05:06,000 Speaker 3: not even been this high since you know, the peak 112 00:05:06,000 --> 00:05:08,240 Speaker 3: of the energy crisis due to the rush of Ukraine War, 113 00:05:08,279 --> 00:05:10,599 Speaker 3: you know, when gas supplies were limited into Europe. So 114 00:05:10,640 --> 00:05:12,839 Speaker 3: it just shows how this kind of these hottest summers, 115 00:05:13,200 --> 00:05:16,360 Speaker 3: this hot weather, definitely driven in some ways by climate change, 116 00:05:16,600 --> 00:05:19,640 Speaker 3: is creating extreme stress on prices and this doill trickle 117 00:05:19,680 --> 00:05:21,880 Speaker 3: down to businesses, to households. You know, we're already seeing 118 00:05:21,880 --> 00:05:24,400 Speaker 3: that this month so far prices are up compared to 119 00:05:24,480 --> 00:05:26,960 Speaker 3: last year, when the juctory that we should be having 120 00:05:26,960 --> 00:05:29,560 Speaker 3: in Europe is a decrease in prices as renewables increase. 121 00:05:29,600 --> 00:05:32,119 Speaker 3: That's what all governments want, that's what will give economic growth. 122 00:05:32,200 --> 00:05:34,080 Speaker 3: But actually that the heat in some times of the 123 00:05:34,160 --> 00:05:36,000 Speaker 3: year can cause US prices to increase. 124 00:05:36,640 --> 00:05:38,560 Speaker 1: I mean, we're told that we'll need to expect more 125 00:05:38,600 --> 00:05:42,000 Speaker 1: of these kind of heat waves in Europe. What does 126 00:05:42,040 --> 00:05:44,880 Speaker 1: all of this mean for energy providers in the future, 127 00:05:45,360 --> 00:05:48,120 Speaker 1: How will they plan to cope with events like this 128 00:05:48,279 --> 00:05:50,080 Speaker 1: that are expected to become more regular. 129 00:05:50,360 --> 00:05:52,400 Speaker 3: It's difficult because when we talk about these types of 130 00:05:52,440 --> 00:05:55,040 Speaker 3: heat waves and these extreme weather events, they are supposed 131 00:05:55,080 --> 00:05:57,160 Speaker 3: to happen once every five years, ten years. They seem 132 00:05:57,160 --> 00:05:59,440 Speaker 3: to be happening once every year or maybe other year. 133 00:05:59,520 --> 00:06:02,640 Speaker 3: So it's definit becoming more important for you know, energy 134 00:06:02,680 --> 00:06:05,240 Speaker 3: providers to become resilient, whether it be you know, for 135 00:06:05,360 --> 00:06:07,719 Speaker 3: double edf building new ways of cooling their reactors, whether 136 00:06:07,760 --> 00:06:10,240 Speaker 3: it be you know, building up good infrastructure to be 137 00:06:10,279 --> 00:06:13,200 Speaker 3: more resilient to temperature. But right now, I think in 138 00:06:13,240 --> 00:06:15,839 Speaker 3: the kind of short term it just shows the importance 139 00:06:15,920 --> 00:06:18,599 Speaker 3: of just having a kind of a flexible system, different 140 00:06:18,600 --> 00:06:21,080 Speaker 3: type of generation, not relying too much on solar, on wind, 141 00:06:21,320 --> 00:06:24,520 Speaker 3: on nuclear, because at any moment the sun the heat 142 00:06:24,560 --> 00:06:26,400 Speaker 3: can actually affect those quite significantly. 143 00:06:27,240 --> 00:06:30,440 Speaker 1: Yeah, indeed, it's very interesting to see how providers are 144 00:06:30,480 --> 00:06:33,880 Speaker 1: going to adapt to these changing patterns in our climate. 145 00:06:34,000 --> 00:06:36,000 Speaker 1: AIM and thank you very much for joining us. AIM 146 00:06:36,040 --> 00:06:40,000 Speaker 1: and Firehat there are Power and Renewables Reporter. For more 147 00:06:40,040 --> 00:06:43,000 Speaker 1: explanations like this from our team of three thousands journalists 148 00:06:43,040 --> 00:06:45,599 Speaker 1: and analysts around the world, go to Bloomberg dot com 149 00:06:45,600 --> 00:06:51,039 Speaker 1: slash Explainers. I'm Stephen Carroll. This is here's why. I'll 150 00:06:51,040 --> 00:06:53,200 Speaker 1: be back next week with more. Thanks for listening.