Drought and falling electricity prices weigh on Verbund's half-year results

Hydropower is the backbone of Verbund's generation, but it is directly dependent on precipitation and snowmelt in the Alpine catchment area. Persistent drought leads to so-called low water, meaning historically low river levels, which reduces the flow through the turbines in the run-of-river plants.

Low water on the Danube and Rhine

The low water levels affect the Danube, the Inn, and other Alpine rivers, which play a central role in the Austrian Verbund system. The Rhine, to which parts of the European electricity market are coupled, has also been subject to low water conditions repeatedly in recent months, further exacerbating the supranational supply situation.

In addition to generation, Verbund is also feeling the drought in its logistics business. Goods are transshipped on the Danube via the Port of Vienna, in which the group holds a stake. During low water, inland shipping must reduce its cargo or temporarily pause, causing the volume of goods transported to decline.

These effects – less generation, lower revenue per megawatt hour, and limited transport volumes – coincide with a period in which European wholesale electricity prices are already under pressure. Cheap gas prices, weaker industrial demand, and the expansion of renewable energies in neighboring countries have recently pushed price levels down.

Double pressure on earnings

According to company figures, the average sales price in the reporting period, at 86.2 euros per megawatt hour, was significantly below the level of comparable prior-year periods. The difference between generation costs and market price narrowed accordingly, which was immediately reflected in operating earnings.

For the assessment of the half-year, it is crucial that both burdening factors – drought and price weakness – acted in parallel. If electricity production had been lower due to low water but prices had been higher, the group could have partially offset the revenue losses through margin gains. Now, both effects pulled in the same direction.

In recent years, the Verbund group has invested heavily in the expansion of renewable generation, but it remains structurally a hydropower company. The volatility of Alpine water availability is therefore a risk that is likely to increase rather than decrease in the coming years.

Outlook on water and prices

Market observers will now be watching how water levels develop in the summer and autumn and whether wholesale electricity prices pick up in the second half of the year. The development of inland shipping cargo volumes via the Port of Vienna is also considered an indicator of how strongly the drought is impacting the group's logistics division.

What is certain is that the first half of 2026 was a period for Verbund in which entrepreneurial skill alone was not enough: nature delivered less water, the market less revenue – both weighed on earnings. The management's response to this double setback is likely to be awaited with keen interest.