LITTLETON, Colorado, Nov 26 (Reuters) - Austrian power generators are well positioned to withstand the loss of pipeline gas supplies from Russia thanks to record wind power output alongside the highest hydro generation total in over a decade.

A contract dispute between Russian energy giant Gazprom and Austrian gas importer OMV (OMVV.VI) , opens new tab resulted in Gazprom cutting off 50 years of gas flows to OMV earlier this month.

But utilities in Austria are in a strong position to make do with only minimal gas supplies over the next several months, thanks to the ongoing reconfiguring of the Austrian power system away from fossil fuels.

If Austria manages to shrug off its loss of gas supplies right before winter - when gas use is typically highest - it could be a fresh blow to Russian exporters who are already reeling from sharply lower sales to northern European markets.

A successful Austrian pivot away from gas could also act as a template for neighbouring nations, which could feasibly also cut their collective gas use and offset power losses with increased imports through their already interconnected grids.

HEFTY HYDRO

Austria's network of more than 3,000 hydroelectric power plants is one the largest in Europe, and forms the backbone of Austria's power system by supplying more than two-thirds of the country's electricity.

Hydro electricity output over the first 10 months of 2024 is up 17% from the same months in 2023 and the highest in at least a decade, according to energy think tank Ember.

High precipitation in late 2023 and early 2024 helped lift Austria's reservoir levels to multi-year highs from the start of the year.

Heavy rains in September, which caused localized flooding, then recharged the country's pumped storage system ahead of winter.

Electricity production from hydro dams was 4.15 terawatt hours (TWh) in October, according to Ember, up 65% from the same month in 2023.

High hydro storage levels combined with continuing strong run-of-river hydro production means power firms will be able to deploy high levels of hydro electricity production in November as well.

And as winter is the peak period of Austrian electricity and power use due to higher heating demand, these topped-up hydro resources will allow Austrian power firms to cut back on the use of natural gas over the near to medium term.

That will eat into overall gas use by the country, as gas-fired generation typically peaks during winter when power firms use gas-fired generation to plug any hydro power shortfalls during the coldest months of the year.

WIND POWER

Higher wind power generation is also eating into gas demand in Austria.

Over the first 10 months of 2024, wind electricity output in Austria was 7.7 TWh, which was 18% more than over the same period in 2023.

That total was also 2.5 times greater than gas-fired electricity output over the same period, cementing wind farms as the second largest source of Austrian electricity behind hydro dams.

The timing of Austrian wind power production peaks is also working against gas use potential in the country, as wind speeds in central and southern Europe tend to peak during the winter when gas consumption has historically been highest.

If wind speeds follow that seasonal trend again in 2024-25, wind generation should remain higher than gas generation throughout the coming winter, which would dent overall gas use in Austria at a critical time for the country.

In all, if Austria can successfully shrug off the loss of gas flows right before winter it would be a bitter blow to Russian gas exporters, as it would demonstrate a further weakening in gas reliance at the heart of Central Europe.

The combination of high hydro and wind production could also act as a template for surrounding countries, who are in the midst of charting their own energy transition roadmaps and are also keen to cut reliance on energy imports.

Neighbouring countries Czech Republic, Hungary, Switzerland, Italy, Slovenia and Slovakia all have extensive interconnected grids with Austria, and so could feasibly also make cuts to their collective gas consumption and offset any power losses with increased local imports.

The opinions expressed here are those of the author, a market analyst for Reuters.

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https://www.reuters.com/business/energy/hydro-wind-double-act-help-shield-austria-russian-gas-loss-maguire-2024-11-26/