experienced significant price increases during the third week of January, driven by a combination of rising demand, decreased wind energy production, and higher costs for gas and CO2 emissions. Notably, solar photovoltaic energy production reached unprecedented levels for January in several countries, reflecting the growing role of renewables in Europe's energy landscape. European electricity markets
According to AleaSoft Energy Forecasting, solar photovoltaic energy production surged across major European markets, with Portugal leading the charge with an 87% increase compared to the previous week. Spain and France also set records for daily solar production, achieving 111 GWh and 60 GWh, respectively. These milestones highlight the growing capacity of solar power to meet energy needs, even during winter months when production is typically lower.
Despite the growth in solar energy, reduced wind energy output compounded market pressures. Wind production dropped significantly in all major markets, with France experiencing the steepest decline at 69%, followed by Germany at 65% and Spain at 60%. This reduced wind generation, paired with colder temperatures driving up electricity demand, pushed prices to some of the highest levels seen in recent years.
Average electricity prices rose sharply in most European markets during the third week of January. The German market saw a staggering 63% increase, while Spain’s MIBEL market recorded a 57% rise. Weekly prices in most markets exceeded €130 ($142.23)/MWh, with Germany and Italy registering the highest averages at €147.93 ($161.81)/MWh and €147.43 ($161.29)/MWh, respectively.
Daily prices reached their peak on January 15, with several markets exceeding €200 ($218.82)/MWh, including Germany and the Netherlands. These high prices reflected the increased costs of gas and CO2 allowances, which continue to shape electricity pricing across Europe.
CO2 futures for December 2025 rose steadily throughout the week, reaching €79.26 ($86.72) per ton on January 17—the highest since May 2024. This surge, coupled with higher gas prices, significantly impacted electricity market dynamics. Brent crude oil futures also experienced increases, peaking at $82.03 per barrel on January 15, further straining energy costs.
Gas futures remained above €46 ($50.31)/MWh for much of the week, influenced by colder temperatures and decreasing European reserves. These price trends underscore the critical interplay between fossil fuel markets, renewable energy generation, and carbon pricing in shaping Europe’s energy landscape.
Forecasts for the fourth week of January indicate some price relief, as wind energy production is expected to rebound in key markets such as France, Germany, and Spain. However, demand fluctuations and continued volatility in gas and CO2 prices could temper these gains.
This period serves as a reminder of the challenges Europe faces in balancing renewable energy growth with the realities of market volatility and climate policy. As solar and wind energy continue to play a larger role, investments in energy storage, grid resilience, and hybrid renewable systems will be essential to ensuring stable and affordable electricity for consumers. Europe’s experience underscores the importance of comprehensive energy strategies to navigate an evolving energy landscape shaped by opportunities and risks.