Europe’s power sector made significant strides in 2025, driven by record solar growth that reduced reliance on fossil fuels and helped contain emissions, according to data released by Eurelectric. However, persistent price volatility and weak electricity demand highlighted the urgent need to accelerate electrification and scale up system flexibility to safeguard the EU’s competitiveness.

Power sector emissions in 2025 stood at around 45% of 1990 levels, reflecting three decades of steady decarbonisation. Despite this progress, momentum toward the EU’s 50% renewables threshold slowed, underscoring the challenge of balancing rapid green growth with market stability and demand recovery.

Solar power emerged as the standout performer. With more than 340 TWh generated, solar accounted for 12.5% of the EU’s electricity mix—the highest share ever recorded. Year-on-year output grew by over 60 TWh, equivalent to Portugal’s entire annual electricity demand, offsetting declines in hydro (-13%) and wind (-4%). Nuclear generation remained stable at around 24%, continuing to provide reliable baseload, while fossil fuel generation was largely contained thanks to the surge in solar output.

Wholesale day-ahead electricity prices averaged €88/MWh in 2025—below 2023 levels but slightly higher than in 2024. Prices were elevated in the first half of the year due to weaker wind and hydro output, before easing as strong solar generation and lower gas prices improved market conditions.

Despite this moderation, price volatility persisted. Negative prices occurred in 3.3% of hours, while spikes above €150/MWh accounted for 9.3% of hours—well below 2022 levels but higher than in 2024—highlighting the growing need for system flexibility.

Electricity prices also became less tied to fossil fuel costs. Whereas around 74% of hours in 2019 saw prices above the cost of gas-fired generation, this fell to just 32% in 2025, illustrating how renewables are decoupling power prices from gas. Eurelectric noted that fully unlocking these benefits will require accelerated investment in storage and flexibility measures.

Electricity demand remained a weak spot. Overall consumption in 2025 was broadly unchanged from 2024 and remained about 7% below 2021 levels, reflecting an uneven industrial recovery and continued efficiency improvements.

“Renewables are reducing Europe’s exposure to fossil fuel prices, but weak electricity demand risks slowing investments. Stimulating demand is key to stabilising markets, supporting industry, and keeping decarbonisation on track,” said Kristian Ruby, Secretary General at Eurelectric. He added: “Additional flexibility—through storage, demand response, and firm capacity—is also critical to reduce volatility.”