2025 showed how quickly energy markets can move. Renewable energy generation, varying weather conditions, geopolitical tensions and varying available generation capacity created volatile markets throughout the year, both in the daily and futures markets. In this article, we summarize the main events and what they meant for you.
Cold winter drives energy prices
At the beginning of 2025, cold winter weather created higher demand for both electricity and gas. Lower temperatures increased power demand, while wind production regularly lagged. As a result, power prices in the forward market rose significantly, and the 2026 annual contract reached its highest level of the year in February. Gas prices also rose. The colder weather, lower gas exports and limited wind production led to more withdrawals from European gas storage facilities. As a result, these fell to about 39% at the end of February. Geopolitical unrest between Ukraine and Russia caused additional upward price pressure.
Solar energy and volatility
In March and April, exceptionally sunny weather had an amplified impact on energy price movements. As a result of more solar energy, several negative hourly prices emerged in the electricity market. At the same time, geopolitical tensions between Russia, Ukraine and the United States caused increased volatility in the futures markets. In the gas market, lower LNG demand in Asia temporarily created additional supply in Europe. This created downward price pressure.
Renewable energy and maintenance work.
Strong renewable energy growth in May depressed power prices and caused an exceptionally high number of negative hourly prices on May 11. At the same time, the 2026 annual contact fell to the lowest price level since April 2024. Then the price came under pressure from the trade war between America and China. Planned maintenance work on Norwegian gas facilities temporarily reduced gas supply, leading to higher gas prices on the daily market.
Heat on multiple fronts
In early July, northwestern Europe suffered from a heat wave. This caused increasing demand for cooling on the electricity market. Due to the lack of wind energy, conventional power plants were used more frequently to meet the higher power demand. Tensions in the Middle East, particularly around the Strait of Hormuz, caused temporary price increases in the gas market. This waterway between the Arabian Peninsula and Iran is an important shipping route for LNG shipments from Qatar, among others. The announcements of a ceasefire led to more calm in the market.
Summer heat and seasonal effects
The summer months were characterized by persistently high temperatures. This led to a temporary increase in power and gas prices, due to higher cooling demand and lower wind production. At the same time, however, overall gas demand remained relatively low, partly due to lower industrial activity during the vacation period. During this period, LNG shipments were more frequently directed toward Asia; however, due to seasonally lower demand in Europe, this had a limited impact on the European market.
Seasonal transition and wind energy
Starting in September, demand for allowances increased toward the compliance deadline, which supported forward prices. At the same time, a surge in wind power created negative power prices. In fact, the only negative daily average of 2025 was recorded in early October. In the gas market, cooler autumn weather and a decreased impact on the energy mix from solar power increased demand. Injections into gas storages slowed and temporary net withdrawals occurred, causing slight upward pressure on gas prices. However, worries remained absent.
Energy market stabilization.
In the fall, the availability of French nuclear power plants improved significantly, increasing electricity supply in northwestern Europe. This prevented further increases in power prices. Geopolitical tensions increased following a Ukrainian drone attack and the seizure of a tanker by Iran near the Strait of Hormuz. Optimism increased at the end of November when the U.S. peace plan was cut from 28 to 19 points.
Mild weather depresses energy prices
For the first three weeks, temperatures were often above average and heat records were reported (Dec. 7-10). Together with robust wind supply, this produced lower daily market prices. At the same time, coal prices fell to the lowest level since February 2024 due to mild weather, high winds and more favorable gas supply. Coal supply in Europe during 2025 was strong and demand relatively low. Price influences arose mainly from developments in gas markets. The CO₂ price increased due to declining supply toward holidays and the planned fewer auctions in 2026. As a result, many traders also bought longer-term allowances. The allowance price rose above €85/ton to its highest price level in two years. The daily market price for gas fell in late 2025 due to strong LNG supplies, stable Norwegian pipeline flows, mild winter weather and high wind production; daily averages even fell below €ct 26.00/m³ on several days. On the futures market, the 2026 annual contract dropped to €ct 25.32/m³ on Dec. 16, the lowest level since March 2022.
Energy price development 2025 shows how strongly gas and power prices depend on weather, geopolitics and market dynamics. Renewable energy regularly created downward price pressure, pushing daytime market prices down sharply during summer afternoons, while gas prices remained sensitive to global developments. For businesses and energy consumers, 2025 again emphasizes the importance of a thoughtful energy strategy.