Italy drought cuts thermal output 3% as Po basin stays dry through August
Gas plants throttle generation on cooling water shortages; broader European heat wave may erase most of bloc's 2026 GDP growth.
Italy's drought forced gas-fired plants to cut output by around 3% of thermal generation on Monday (2026-08-10), with no significant rainfall forecast to lift Po basin levels until late August, analysts told Montel.5
Power producer EP Produzione's 2 GW Tavazzano-Montanaso plant authorised output reductions of up to 65% over the weekend as temperatures in the Muzza canal approached critical levels, Ciro Borrelli, head of business development for southern Europe at the company, told Montel.5
The immediate constraint is cooling water availability. River flows in the Po basin have dropped far enough that thermal plants reliant on once-through cooling are hitting regulatory temperature limits on discharge water. Meteorologists see no relief before late August.5
The cuts come as shortages of cooling water threaten up to 20 GW — nearly one-third — of Italy's thermal power capacity during the current heat wave, likely keeping spot power around EUR 200/MWh, an analyst told Montel on Thursday (2026-08-06).3
Italian power prices have held near EUR 200/MWh in recent sessions. Earlier, in May (2026-05-21), analysts warned that prices could spike to EUR 320/MWh if gas supply disruptions from the Iran war compounded weather-driven tightness.1,3
The drought hits as extreme heat waves across Europe are expected to erase as much as 1% of EU GDP this year, wiping out most of the bloc's anticipated growth, according to a report by Dutch bank Triodos carried by Reuters on Monday (2026-08-10). The bank estimates labour productivity losses will cut EU GDP by 0.6%, while agricultural output could fall 3% to 7%.4
EU GDP growth is projected at 1.1% for 2026, down from 1.5% in 2025, according to the European Commission's spring forecast. The Commission revised its estimate down by 0.3 percentage points due to the new energy shock following the Iran war, and now expects inflation to reach 3.1%, a full percentage point higher than the autumn 2025 forecast.4
France's economy could contract by as much as 0.6% if heat waves cut GDP by the estimated 1.4%, the Triodos analysis showed.4
European refineries are also losing cooling efficiency in the heat, while low river levels have forced cuts to nuclear generation and made inland fuel transport more expensive as barges carry smaller loads, according to industry reports published last week (2026-08-06).2
ICE Endex TTF front-month gas settled at EUR 60.82/MWh on Monday (2026-08-10), up 9.6% on the session. German power baseload rose 3.6% to EUR 135.95/MWh.
The near-term question is whether the late-August rain materialises. If it does not, the 20 GW of at-risk thermal capacity becomes the binding constraint on Italian supply, with gas plants unable to run even if TTF prices moderate. Spot power would stay elevated through September.3,5