The Column – Market Insights
The escalation of the conflict in the Middle East has brought the cost of energy back to the center of the debate on the European economy, not so much as a sudden emergency but as a structural factor of instability which continues to influence prices, investments and industrial choices.
The price of gas reacted less violently than the 2022 shock, but European prices still more than doubled. This dynamic is directly reflected on the electricity market, where gas continues to set the marginal price, especially in countries with a still significant share of thermoelectric generation, making the European economy is also very sensitive to relatively small fluctuations in gas supply. The central issue remains the dependence on foreign countries.
In 2025 the European Union imported energy products worth around 337 billion eurosa figure that weighs on the trade balance and represents a net transfer of resources towards energy exporting countries (Gulf countries, but also the United States, Algeria, Libya, Azerbaijan).
The few reserves within the area explain this structural fragility: EU+UK+Norway have natural gas reserves equivalent to approximately six years of consumption at current levels (very few), while oil reserves are even lower than annual demand, making Europe inevitably exposed to any geopolitical crisis in the Middle Eastern area and in the transit corridors.
The political response resulted in the launch of the AccelerateEU packageconceived as an economic and industrial tool to transform geopolitical shock into structural acceleration of the transitionthe only real strategic alternative for the European continent.
AccelerateEU aims to reduce gas demand by around 15% by 2028 compared to 2024 levels, increase the rate of final electrification of consumption above 35% by 2030 and support the installation of more 100 additional gigawatts of renewable capacity by the end of the decade, with a particular focus on wind and solar. The package also envisages the mobilization of approximately 200 billion euros of public and private investments between 2026 and 2030, mainly intended for the strengthening of electricity networks, the development of large cross-border backbones and the digitalisation of the energy system, elements considered essential to absorb growing volumes of renewable production.
From a macroeconomic point of view, the declared objective is twofold: reduce the volatility of energy prices and increase the resilience of the European production system. A necessary step that can no longer be postponed given the importance of manufacturing on the European continent.
It is already evident today that countries that have less dependence on fossil fuels (thanks to the strong presence of renewables and/or the presence of nuclear power plants) have an enormous advantage: average electricity prices are lower (look at France or the Nordic countries) and above all they are more stable being less often set by the price of natural gas (look at Spain compared to Italy), as is well shown by the FT/Fidelity graph and that of Impax Asset Management respectively.
On the front of demand for energy from alternative sources, the graphs show an equally significant transformation. Sales of heat pumps in Europe grew steadily from 2015 to 2025, going from marginal values to tens of millions of units installed, with a strong temporal correlation with the increase in gas prices. Since the beginning of the conflict in 2026, several energy market operators have reported an increase in requests for information to improve consumption efficiency, demonstrating how private individuals also react to shocks. A growing demand dynamic also emerges on the photovoltaic and electric mobility sidewhere the growth in sales continues also thanks to the arrival of better performing vehicle models in terms of battery life and competitive in terms of price.
It is undoubtedly true that many of the components related to electrification Europe imports them from Chinalike many other countries around the world. As evidence of this, it is interesting to observe how the Asian country is setting new export records month after month for electric vehicles, solar panels and batteries.
May the future be bright for the companies, European and otherwise, protagonists of the energy transition, this can also be seen very well on the stock market where, again this year as in 2025, the products that invest in it are performing much better than the overall stock market. The Bloomberg graph which takes into consideration the performance of a couple of ETFs and a historic thematic fund shows this well.
Until next time!
