Extreme Heat Prepares to Impact European Energy Markets – Risk of Electricity Price Surge

This summer, marked by extreme weather phenomena, is set to deliver a cool and humid start in Northern Europe in June, disrupting energy markets increasingly reliant on solar and wind power. High-pressure systems are expected to return later this month, bringing the risk of heatwaves following an unusually dry and sunny spring. This will increase energy demand for cooling, though the impact on natural gas prices will depend on rising solar production and nuclear output levels in France. Meteorologist Andrew Pedrini of Atmospheric G2 stated, ‘This summer appears to be one with significant impact,’ adding that ‘we’ll hear a lot about extreme events.’ The Mediterranean region has already experienced unusual heat, with temperatures nearing 39°C in Seville on May 30, the hottest day in Spain that month since 1950. According to Atmospheric G2 and MetDesk, areas including the Balkans and Southeastern Europe could face the most extreme heat this summer. Even Scandinavian countries are expected to see above-average temperatures throughout much of the season. As high-pressure patterns persist, wind energy production may decrease while solar energy production could soar. Many major European rivers, including the Rhine, have recovered from low levels caused by warm, dry spells earlier this year due to heavy rains and snowmelt. However, extreme heat could reverse these gains, especially in the Alps where Swiss hydropower reservoir levels remain below normal. Balancing supply and demand becomes more complex with increasing renewable energy integration, says Nick Campbell of Inspired. Traders will closely monitor developments all summer as Europe’s growing reliance on renewables amplifies weather’s role in energy markets.