Drought on the Danube Threatens Regional Economic Growth

In his column on the website of the Polish Centre for Eastern Studies (OSW) based in Warsaw, Andrzej Sadecki draws the first conclusions from the 2026 summer in Europe, the hottest one on record.

Low water levels and high water temperatures in the Danube have caused serious disruption to electricity generation across Central and South-Eastern Europe.

Nuclear reactors need water for cooling. Due to a shortage of water, Hungary has temporarily shut down three of the four units at the Paks Nuclear Power Plant, leaving only around 12 percent of its total installed capacity of 2,000 MW in operation. Romania also took one of the two units at the Cernavodă Nuclear Power Plant offline, leaving only half of its installed capacity of 1,300 MW available. Slovenia’s Krško Nuclear Power Plant has reduced generation by approximately 20 percent of its total 700 MW capacity.

Hydroelectric power plants on the Danube have also seen a sharp decline in electricity generation. The Iron Gates hydropower complex shared by Romania and Serbia produces only some 25 percent of 1,400 MW. At Slovakia’s Gabčíkovo hydroelectric power plant, output has fallen to just 90 MW of its 720 MW installed capacity.

Nuclear power used to account for up to 40 percent of electricity generation in Hungary and some 20 percent in Romania. Hydropower provided roughly 25 percent of Romania’s electricity output. Serbia’s Danube hydroelectric power plant normally accounts for approximately 20 percent.

The countries affected by the drought have so far avoided widespread blackouts, and have been able to offset the loss through increased imports. However, this has resulted in a significant rise in electricity costs, while voluntary reductions in industrial output are likely to weigh on economic growth.

According to estimates by Portfolio.hu, Hungary’s daily electricity import bill has risen from approximately EUR 1.7 million to EUR 11 million.

The drought and low water levels on the Danube have also disrupted inland waterway transport, increasing the cost of shipping goods such as petrochemical products and fertilizers. Grain exports from Danubian countries are under threat. At first, barges had to be loaded to just 20–30 percent of capacity, and now shipments have been stopped. They are now being shifted to road and rail, increasing costs and consumption of scarce electricity.

The tourism sector has also suffered, particularly from the suspension of river cruises on the Danube. The Viking Ullur cruise ship, with 186 passengers, ran aground on a sand bank between Romania and Bulgaria. The passengers had to be evacuated, and the vessel could only be refloated using a dredger.

These losses will make it more difficult for both Romania and Hungary to overcome their current economic challenges. In Romania, which is already grappling with a debt crisis, the latest disruptions could prolong economic stagnation or even push the country into recession. The European Commission forecasts GDP growth of just 0.1 percent this year. They may also exacerbate inflationary pressures, with Romania already recording the highest inflation rate in the EU at 9.2 percent in June. In Hungary, the disruptions could dampen the expected economic recovery.

The issues described by Andrzej Sadecki are not unique. Nuclear power plants in France and Rhine river transport have encountered similar problems. Europe has spent huge money fighting clime change – only to be hit hardest by it.

If the money spent on combatting climate change were used to strengthen power grid resilience and diversify energy sources and transport logistics, that would both stimulate economic growth and protect against inevitable climate changes. But in the future we shall probably see more funds going into the fight against climate change – justified precisely by this summer’s anomalous heat.

Original publication: https://www.osw.waw.pl/en/publikacje/analyses/2026-08-06/drought-danube-region-deals-a-blow-to-electricity-generation