European Summer Power Prices Soar to Winter Highs as Heatwave Grips Continent
By Forrest Crellin and Susanna Twidale
PARIS/LONDON, July 31 (Reuters) - An unprecedented heatwave which has gripped Europe this summer has caused power prices to rise to levels usually only seen in the cold winter months when heating demand spikes.
Europe is the fastest-warming continent, meaning summer heatwaves and their impact on the power grid are expected to become more common.
Key Factors Driving Summer Power Price Surges
Below are some of the reasons summer power prices are peaking:
1. Cooling Demand Spikes, Output Drops
Prices jumped in late June and mid-July ahead of the worst days of the heatwave, as buyers in the electricity market scrambled to cover high demand for cooling. Price pressures were exacerbated by reduced output from French nuclear and German and British gas power plants, as well as European wind turbines as the heat brought low wind speeds and reduced output from wind farms.
On June 23, day-ahead prices reached a high of €210/MWh in Germany with contracts in France and Britain also reaching levels not recorded since January 2025, LSEG data showed.
Expert Insights on Market Volatility
"Since climate change involves not only an increase in average temperature but also an increase in extreme events, I believe heat waves will become the norm, affecting gas and power prices," Kpler analyst Alessandro Armenia said, predicting even more volatility next summer.
2. Heat Reduces Nuclear Power Capacity
Nuclear power is the single largest source of electricity in the EU, contributing around 23% of the continent's electricity, Ember data show. France's nuclear fleet, which is Europe's largest and typically exports power to neighbouring countries, is cooled using river water. When heatwaves cause river temperatures to rise over certain levels the plants' generation capacity needs to be reduced. The Bugey nuclear plant in eastern France, for instance, must reduce output if the temperature of the Rhone, the river which cools it, crosses 26 degrees Celsius.
Impact on French Nuclear Output
When temperatures peaked at over 40 C, French nuclear output was cut for several days by over 9 gigawatts for 12 reactors out of the 57 total, Kpler data showed.
High temperatures in the rivers cooling France's plants are expected for much of summer.
3. Gas, Solar Production Can Become Less Efficient
Gas turbines, which provide almost 17% of the EU's power, work like a pair of lungs, drawing in air as they produce power. When the air is hotter, its oxygen content drops, reducing the amount of fuel that can be burned efficiently.
Gas Plant Efficiency Challenges
A 30 C day can reduce a typical gas plant's output by around 7–12%, Rystad Energy data showed.
Compounding Factors for Gas Prices
"The effect may not be large enough on its own to drive extreme prices but it adds to the stack of constraints that matter when the system is already tight," said Tor Olav Haegeland, analyst at Rystad.
Gas prices are also now near their highest levels since Russia invaded Ukraine in 2022 as the Iran war has curbed energy flows from the Middle East, driving up electricity production costs.
Solar Panel Efficiency in High Temperatures
Solar panels, meanwhile, can lose efficiency during high temperatures because they can curb cell voltage output, even with lots of sunlight.
4. Cooling Demand Rises as Summers Get Hotter
Air conditioning is not yet as ubiquitous in Europe as it is in parts of Asia or the United States, where electricity demand peaks during "summer cooling" seasons, but the use of cooling devices is on the rise as summers get hotter and heatwaves more frequent.
Weather-Related Spikes in Power Demand
With that come bigger weather-related spikes in power demand.
"The typical issue we witness is a mismatch ... we see less electricity generation during heat waves ... at a time where there is increased demand," said Laurent Bataille, executive vice-president of European operations at Schneider Electric.
Britain's Response to Summer Power Strain
In Britain, the National Energy System Operator on June 23 issued its first-ever summer electricity margin notice, calling on generators to produce more power.
(Reporting by Forrest Crellin in Paris and Susanna Twidale in London, additional reporting by Tristan Veyet; editing by Nina Chestney and Tomasz Janowski)
