It has been a turbulent year for Europe’s energy markets. Renewed conflict in the Middle East, the temporary blockade of the Strait of Hormuz and a record-hot summer have once again unsettled oil and gas prices, yet the electricity system has held up far better than in previous crises. That is the central finding of Eurelectric’s Power Barometer 2026, the annual assessment by the association representing Europe’s electricity industry. At the same time, the report warns that storage and other forms of flexibility are not being added fast enough to keep pace with the growth of renewables.
Between February and August 2026, EU wholesale electricity prices rose by 22.8 percent, while gas prices climbed by 88.4 percent. In the earlier phase of the crisis, from February to May, gas prices jumped by 41 percent while power prices actually fell by 7 percent. The Power Barometer attributes this decoupling to the continued growth of clean generation, which reached 72 percent of the EU electricity mix in 2026. Wind and solar alone supplied 30 percent of EU generation in 2025, doubling their share over six years and pushing fossil generation below 30 percent for the first time. Emissions intensity fell to a record low of 182 grams of CO₂ per kWh, with total power-sector emissions now 64 percent below 2008 levels.
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"2026 has seen severe disruption of global energy markets, once again exposing the risks of reliance on imported fossil fuels," says Kristian Ruby, Secretary General of Eurelectric. "Amidst the turmoil, we're seeing real proof that Europe's bet on clean electricity is paying off."
Gas retreats to a balancing role
The report highlights how the role of gas is shifting. Gas-fired plants are increasingly deployed as a scarcity and balancing resource rather than a base-load option, with utilisation now closely tied to periods of low renewable output. In Germany, hourly prices average below €30 per MWh when renewables cover at least 73 percent of load, showing how wind and solar are pulling prices down when they run at full strength.
Yet the summer of 2026 also exposed the weaknesses that remain. In June, a severe heatwave pushed up cooling demand just as wind and hydropower output was weak and nuclear availability was reduced, triggering sharp evening price spikes. Hungary and other central and eastern European markets were hit hardest, because cross-border capacity limits prevented cheaper power from neighbouring countries from flowing in during peak stress hours. Those limits are not confined to one region: progress on the EU’s 70 percent minimum cross-zonal capacity requirement remains uneven, with only Slovenia, Czechia, Belgium and France near or above the threshold.
Storage is emerging as the decisive lever
Bulgaria offers one of the clearest examples of what storage deployment at scale can deliver. Since the country added 5.4 GW of battery capacity, its wholesale power prices have moved from 21 percent above the EU average in 2024 to just 8.3 percent above in 2026, thanks to reduced reliance on expensive fossil generation during peak periods. EU-wide utility-scale battery storage more than doubled in 2025, reaching 11.2 GW of operational capacity, with a project pipeline exceeding 80 GW. Poland, Germany and Italy are each expected to surpass 10 GW in the near term, and Poland’s 2025 subsidy calls and capacity auctions alone awarded 34.5 GWh.
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Even so, Europe’s overall storage position remains inadequate. Utility-scale capacity stood at 64 GW in 2025, and with 78 GW of planned additions, deployment still falls far short of the EU’s 200 GW target for 2030. The Power Barometer identifies a range of structural obstacles, including double taxation of stored electricity, permitting frameworks designed for large generation plants, fragmented ancillary service markets across 27 member states and connection queue rules that fail to reward project readiness. Transposition of the revised Renewable Energy Directive (RED III) is a further concern. In July 2025, the European Commission launched infringement proceedings against 26 of 27 member states.
Grids and electrification under pressure
Grid infrastructure faces much the same pressure. Distribution system operators (DSOs) face record connection queues from both prosumers and industrial consumers, with average prosumer numbers quadrupling between 2022 and 2025. DSO investment is growing at 12.5 percent a year, reaching €36 billion in 2024 and heading towards €48 billion by 2027, but permitting delays, regulatory uncertainty and supply-chain bottlenecks continue to slow delivery.
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On the demand side, electric cars are gaining ground quickly. EU battery-electric vehicle registrations reached 31 percent of new car sales by August 2026, up from 24 percent in 2024. Heat pump sales rose by 11 percent in 2025 after a sharp contraction the previous year, with Germany posting the strongest rebound. Data centres, however, are a growing source of uncertainty, with projections for their annual consumption ranging from 100 to 250 TWh by 2030, depending on methodology.
A warning on car CO2 standards
The report also warns against weakening the EU’s 2035 car CO₂ standards. Eurelectric estimates that the current regulation would displace 810,000 barrels of oil per day, whereas the Commission’s proposed revision would cut this to 720,000 barrels a day, and the targets favoured by carmakers would reduce it further to 570,000 barrels.
“Continued investment in clean power, storage and flexibility will be key to further limiting the transmission of gas-price shocks into electricity prices,” says Kristian Ruby, secretary general of Eurelectric. In his view, clean electrification is now closely tied to Europe’s energy security and long-term competitiveness. (hcn)
