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The beginning of 2026 was expensive for many electricity consumers. The media talked extensively, and with good reason, about high prices. As spring progressed, the situation began to normalize, but average prices were still higher than expected.
So what actually happened, and what factors influenced electricity prices this spring in Europe?
The high prices seen in January and February have eased, which was an expected development. Finland's average electricity price has dropped significantly compared to the start of the year. Still, the overall picture is clear: this year has been noticeably more expensive than 2025, particularly in Finland, Sweden, and Norway. Last year was exceptionally cheap, and while prices will likely fall further over the summer, average prices are unlikely to return to last year's levels.
The situation in the Middle East and the closure of the Strait of Hormuz disrupted LNG vessel arrivals in Europe, which pushed up natural gas prices. Since Central Europe still uses gas for electricity generation, higher gas prices have driven up average electricity prices.
Although gas prices have pushed up average electricity prices in Central Europe, those countries haven't seen truly extreme price levels. The high gas price has been offset by growing solar generation capacity, which, combined with expensive gas-based production, causes large intraday price volatility.
Prices form a V-shape throughout the day: high at night and early mornign, but on sunny days solar production drives the price to zero or even negative. Negative midday prices push gas turbines offline, since they don't want to generate at a loss. This in turn drives prices higher in the evening, as the turbines need to cold-start again, which costs the producer more and gets priced into the electricity rate.
On one Sunday in May, the spot price fell to nearly -500 €/MWh in Central Europe. Prices dipped close to the floor of -500 €/MWh several times during the spring, and as a result the floor was lowered from -500 to -600 €/MWh.
In the Nordic electricity system, Norway plays a central role: its large hydro reservoirs influence prices across the entire region. This year, Norway experienced both an unusually low-snowfall winter and its coldest winter since 2010, leaving reservoirs about 25 TWh below normal levels. For context, Finland's total annual electricity consumption is around 85–90 TWh. This shortfall has pushed up the general price level across the Nordics.
The situation is compounded by the fact that the deficit is particularly severe in southern Norway, where consumption is highest and from which large volumes of electricity are exported to Central Europe. Transmission capacity within Norway is insufficient to move enough power from the north to the south, keeping prices elevated.
In Finland, prices have been pushed up not only by Norway's hydro situation but also by the fact that a large share of nuclear capacity has been offline for maintenance: during spring, outages affected roughly 1,000 MW of nuclear production. The situation will tighten further in autumn, when overlapping maintenance could take more than 2,000 MW of nuclear capacity out of service simultaneously. With Finland's electricity consumption running between 7,000 and 9,000 MW, that is a very significant amount, particularly during calm, low-wind periods.
Nuclear capacity offline in Finland April–November 2026.
Several open questions about the future of electricity markets have sparked broad discussion this spring.
New consumption investments, such as data centers and large industrial facilities raise questions about whether electricity prices will rise further. In open electricity markets, rising demand pushes prices up, but higher prices also attract new generation capacity, which in turn brings prices back down. It's a balancing act, not a straightforward price spiral.
Generation and transmission investment also carries uncertainty. For example in Finland, the municipality of Kemijärvi has banned the construction of pumped-storage power plants in its territory, ruling out several planned projects.
Sweden, meanwhile, has suspended construction of a new interconnector with Denmark due to a dispute over EU bottleneck revenues, and is also reconsidering the construction of new cross-border links between Sweden and Finland as a result of the same decision.
What is the bottleneck revenue dispute about? When the transmission network is congested and electricity cannot flow freely between areas, price differences emerge between countries. The revenues collected from these price differences are called congestion or bottleneck revenues. Sweden collects significant amounts when exporting electricity to its neighbors, Denmark, Finland, and Germany, estimated at as much as 130 billion kronor over the next ten years. The dispute with the European Commission arose over how those funds may be used: Sweden wants to channel them into new generation capacity, in practice nuclear power, while the Commission's proposal is that they should be directed toward grid development.
Spring 2026 on the electricity markets has been the product of multiple converging factors: a dry winter in Norway, natural gas prices in Central Europe, and nuclear maintenance outages have all weighed on electricity prices. New investments raise further open questions. Prices have come down from early-year highs but remain above last year's levels.
We'll revisit after summer to see how the warmer months have affected prices and whether cooling demand has driven electricity consumption up as anticipated.
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