Monthly electricity prices in the European Union 2020-2022, by country

In 2021, wholesale electricity prices in the European Union (EU) soared, with most countries experiencing record levels in December. The combination 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 – the spike in European electricity prices was just one aspect of a global energy supply shortage which has seen energy prices grow around the globe.

 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 roughly one third of the output in 2020, electricity rates are highly dependent on the price of these commodities. Natural gas prices in Europe increased continuously throughout 2021, as reserves reached worrying low levels in the region and Russia, the main source of natural gas in Europe, kept exports low in order to replenish its own depleted stocks.

Different rises for different countries

  While the energy supply shortage hit Europe as a whole, the impact on each country’s electricity price varied. In December 2021, Switzerland recorded the highest figure in the region, at 282.14 euros per megawatt hour. Italy, the European Union’s leading electricity net importer, experienced similarly high electricity prices of 277.54 euros per megawatt hour that month. 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.