Electricity – The Energy Transition in an Era of Surplus and Costs
Abundant solar and wind power, combined with low demand, has led to an oversupply and low intraday electricity prices in recent days; this is becoming increasingly common and could break records again in 2026;
At the same time, long-term electricity prices remain high because gas prices are the determining factor; geopolitical tensions (such as those surrounding LNG supplies from Qatar) are keeping gas prices high, which means that electricity remains relatively expensive despite the abundance of renewable energy;
ETS costs and the phase-out of free emission allowances are putting increasing pressure on companies and raising the risk of carbon leakage, while the revision of the EU ETS is attracting growing attention;
The EU ETS works best when CO₂ pricing is combined with subsidies to make sustainability cost-effective, but political divisions (including over price caps and floors) and greater policy flexibility can both facilitate adaptation and undermine investment certainty.
