What’s shaping European power markets in 2026?

Europe’s ambitious climate-energy targets have been underlined by decades of solid policy support – and nowhere is that sustained focus more apparent than in the power sector. From that policy background, regulatory support and market frameworks have emerged to drive major investment in new generation, energy storage, networks and other infrastructure. As a result, Europe’s power market stands apart from other major regions, with more than half of its power now renewable – and nearly two-thirds supplied from low-emissions sources. But with so many substantial moving parts, what really defines the sector’s continued evolution?

In contrast with other major markets, Europe has yet to see any significant increase in power demand this decade. While the rise of data centres is driving surging demand growth in the US, and many Asian markets are seeing rapid growth as their economies develop, European power demand has yet to return to pre-pandemic levels.

The combination of strong supply and weak demand is a central influence on Europe’s power markets, with more volatile prices, grid congestion and curtailment increasing risk for investors. But it isn’t all about the downside, and substantial opportunities continue to be present in the sector for those able to navigate its complexities.

The six factors shaping European power markets

In our recent insight, 6 Factors Shaping European Power Markets, we draw on our detailed tracking of power volumes and prices to define fundamental influences on market behaviour and outcomes. For continued progress on decarbonisation to be made, these factors represent the challenges that successful companies must adapt to or overcome.

To find out which factors we think are critical to making sense of the market environment, fill out the form on this page to download your complimentary copy.