Hydropower has traditionally been treated as one of Southeast Europe’s most valuable electricity assets: renewable, dispatchable and capable of responding rapidly to changes in system demand.
August showed why its economics increasingly need to incorporate more explicit hydrological risk.
At Serbia’s Đerdap 1, Danube inflows fell to approximately 1,400 cubic metres per second, pushing production to only around 20% of normal output.
Đerdap 2 was operating at roughly 30%.
The weakness came during a period of high summer electricity demand.
Instead of contributing normal volumes to the Serbian system, the hydro fleet produced substantially less energy.
Albania faced a similar problem.
KESH, whose generation portfolio is overwhelmingly hydro-based, moved into electricity procurement during late August after weaker hydrology reduced domestic supply.
Purchase procedures were launched for Aug. 22-30 and subsequently for Aug. 31-Sept. 30.
For a system that can be a significant exporter during strong-water periods, the switch into import requirements illustrates how rapidly hydrology can change national trading positions.
This matters for valuation.
Hydro projects are frequently modelled using long-term average generation, but that average can conceal increasingly volatile annual and seasonal outcomes.
Reservoir hydro retains substantial value because operators can choose when to generate.
Run-of-river assets face more direct exposure to changing flows.
The complication is that low-water conditions can affect several plants and markets simultaneously.
A dry Danube can reduce generation across multiple stations, while broader Balkan drought can hit Serbia, Albania, Montenegro, Bosnia and Herzegovina and North Macedonia at the same time.
That weakens some of the diversification traditionally expected from regional hydro portfolios.
Investment in modernisation remains important.
Germany agreed during August to provide Albania with €114 million, comprising around €90 million of loans and €24 million of grants, for energy investments that include rehabilitation of the Vau i Dejës hydropower plant and transmission improvements.
Modern turbines and better plant control can improve the amount of electricity extracted from available water.
They cannot remove hydrological volatility.
For investors, that means future hydro valuations will increasingly need to distinguish between installed MW, expected annual MWh and dependable production during stressed hydrological periods.
