Expanding EU energy market integration is key for global competitiveness and decarbonisation

ACER kicks off its 2026 Monitoring Report series with key insights into the EU energy markets, highlighting major developments in 2025 and examining the interplay between gas and electricity markets in the energy transition.

What are the key findings?

The report shows solid progress in Europe’s clean energy transition. It also underlines persistent structural challenges (such as price volatility, system flexibility and supply risks) and how to address them.

• Wholesale energy prices continued to decline, but global competitiveness remains a challenge, with both gas and electricity prices structurally higher than in the US.
• Household gas and electricity prices remain high despite falling wholesale prices.
• Renewables lead the power mix, providing 50% of total EU electricity generation. Solar drives the energy transition, with investments in solar generation rising by 41 TWh compared to 2024. 
• Electricity price volatility increased: Daily wholesale power price swings were around five times higher than in 2020, highlighting the growing need for flexibility. 
• Gas provides evening flexibility: As solar generation drops in the evening, gas-fired power plants are increasingly used to meet demand, pushing wholesale prices upward.
• Extreme weather drives price spikes: A heatwave on 1 July 2025 reduced cooling efficiency at thermal and nuclear plants, pushing power prices in Poland to around 470 EUR/MWh. 
• Regional price differences highlight the value of interconnections: Different generation mixes and system flexibility across countries offer opportunities when systems are well interconnected. 
• Gas markets remained stable, with hub spreads generally below 2 EUR/MWh.
• EU slashed its reliance on Russian gas, replacing it with global LNG: Russian pipeline imports to the EU fell by about 162 TWh compared to 2024 and were fully offset by record-high LNG imports.
• Low year-end gas storage: Heavy winter withdrawals left storage levels 10% below 2024.

What are ACER’s recommendations? 

To support global competitiveness and decarbonisation, Europe should step up efforts to expand energy market integration:

• Make energy prices more efficient and transparent: Ensure efficiency across all price components (energy and supply, network charges and taxation) to improve household affordability and industrial competitiveness.
• Harness flexibility: Expand demand response, electric vehicles (EVs) and battery use to balance supply and demand, reduce price swings and strengthen grid resilience.
• Strengthen market integration: Expand interconnections to support cross-border use of renewables, reduce fossil fuel dependence and improve system flexibility and security.
• Diversify gas supply: Higher LNG supplies replaced Russian pipeline gas but increased reliance on US LNG imports. Greater supply diversification, including domestic decarbonised gases, would reduce vulnerability and mitigate the impact of global price volatility.
• Reduce reliance on conventional gas: With gas consumption still well above 2030 targets, further action is needed to cut demand and accelerate the uptake of renewable gases.