Monthly electricity prices in selected EU countries 2020-2023

Wholesale electricity prices in the European Union (EU) decreased in the first half of 2023, after soaring in 2021 and 2022. The spike in European electricity prices was one aspect of a global energy crisis, and the result of a myriad of factors, including increased demand in the “post-pandemic” economic recovery, a rise in natural gas and coal prices, and a drop in renewable power generation due to low wind speeds and drought.

 Surging gas and coal prices driving electricity costs

As natural gas and coal are among the leading sources of electricity generation in the EU, accounting for more than one-third of the output in 2022, electricity rates are highly dependent on the price of these commodities. Natural gas prices in Europe increased continuously throughout 2021 and the first half of 2022, as reserves reached worrying low levels in the region. Uncertainties over the future Russian gas supply following the country's invasion of Ukraine were one of the main factors driving up gas prices in 2022.

Different rises for different countries

While the energy supply shortage hit Europe as a whole, the impact on each country’s electricity price varied. Throughout the whole period, Italy recorded the highest figure in the region and surpassed 540 euros per megawatt-hour in August 2022. The country is the EU’s leading electricity net importer. Meanwhile, Sweden – where hydropower and nuclear energy account for a large share of the country's electricity generation – saw a less pronounced growth in prices in the period.