European power prices drop below pre war levels on renewable surge

Friday 17 April 2026 - 17:25

By: Dakir Madiha

European power prices drop below pre war levels on renewable surge

European electricity prices have fallen below levels seen before the Middle East conflict, driven by a combination of expanding renewable energy output and a sharp decline in natural gas prices. The drop accelerated after Iran announced the reopening of the Strait of Hormuz, easing concerns over energy supply disruptions and improving market sentiment across the continent.

The decline follows a broader easing in energy markets linked to a fragile ceasefire between the United States and Iran, as well as a separate truce between Israel and Lebanon. Iranian Foreign Minister Abbas Araghchi said the strait was fully open during the ceasefire, a statement initially acknowledged by Donald Trump, although US maritime restrictions targeting Iran remain in place.

Energy benchmarks have reacted quickly. Brent crude futures dropped around 10 percent, falling below 90 dollars per barrel, while European gas prices measured by the TTF benchmark declined to about 38.87 euros per megawatt hour, down nearly 29 percent over the past month. Lower gas prices have directly reduced electricity generation costs, reinforcing the downward trend in wholesale power markets.

Structural changes in Europe’s energy mix are amplifying the effect. Weekly average electricity prices have fallen below 90 euros per megawatt hour across most major markets, with particularly low levels recorded in France. Record solar output in both France and Germany has added further downward pressure, reflecting the growing role of renewable energy in shaping price dynamics.

The shift is part of a broader transformation. For the first time in 2025, wind and solar combined have generated more electricity than fossil fuels in the European Union, accounting for around 30 percent of total output, while renewables overall reached 48 percent. Solar generation alone has continued to expand rapidly, marking a fourth consecutive year of strong growth.

Despite the recent relief, uncertainty remains. Analysts warn that a full normalization of energy markets could take months due to lingering infrastructure damage and the fragile nature of the ceasefire. Oil prices remain above pre conflict levels, and geopolitical risks continue to influence supply expectations. The current decline in electricity prices may therefore prove temporary if tensions escalate again.