Electricity prices set to hit record highs from 2023: gas, consumption and generation under the microscope

The recent rise in wholesale electricity prices has caught the attention of ARERA, which on 6 August ordered the strengthening of the Electricity Market Supervisory Unit, launched in March. The authority also cited as causes ‘objective factors affecting the entire European energy sector. These include the persistent shortage of gas supply on international markets, the rise in electricity demand due to high temperatures, and restrictions on energy production in several European countries caused by exceptional weather conditions’.

The threshold that triggered the reaction was 207.8 euros per MWh, reached on Wednesday 5 August, following an extraordinary start to the week: the daily figure for Monday 3 August was €197.7 per MWh, up from the monthly average of €157 recorded in July (€133 in June, €119 in May and April, €143 in March, €114 in February and €132 in January). The average daily price on 6 August fell to 198.3 euros per MWh, whilst that of 7 August stood at 184.2. However, prices are currently at levels not seen since January 2023: the wholesale price on 23 January 2023 stood at 204 euros. Apart from the peak of 192.8 euros per MWh on 20 January 2025, the daily GME Pun Index has remained below these levels over the past three and a half years.

The upward trend, following the turmoil in March caused by the war in Iran, had already begun in June, driven by the (at that time slight) rise in gas prices and consumption – which was also fuelled by the exceptional heat that month. As for gas, by the end of July, prices on the Amsterdam TTF market had risen to over 60 euros per MWh – a level not seen since last March – driven by the ongoing blockades of the Strait of Hormuz, which had cut off LNG supplies by sea. Yesterday, the price on the Dutch exchange stood at 57 euros.

On the electricity demand front, however, high temperatures helped to drive up consumption, due to the use of air conditioning. According to Terna’s figures, the peak demand in June was recorded on the 29th at 57.4 GW. In July, however, the peak was recorded on the 15th at 58.1 GW: an annual record. Whilst the all-time daily record set in 2015 (60.5 GW) remains unbroken, this figure comes close to the peak of 2023 (58.87 GW, on 19 July of that year) and exceeds that of 2024 (56.98 GW, on 28 July) and 2025 (55.54 GW, on 2 July). In the first week of August, the peak daily demand remained at around 54 GW, and it is easy to imagine that the consumption curve is set to fall further now, with the summer holidays and business closures. Presumably, prices will follow suit: with lower demand, the less efficient and more expensive gas-fired power stations will be excluded from the price-setting process.

As regards production constraints, Europe is struggling, starting with France, a major producer of nuclear power (which we also import): water shortages or high temperatures are preventing the reactors from being cooled. The Danube has forced power stations in Hungary, Romania and Bulgaria to shut down or reduce output. Croatia is facing the same problems. The energy situation in Europe is currently stable and poses no immediate risks to security of supply, but remains tense, said European Commission spokesperson Anna-Kaisa Itkonen on 6 August. In Italia, some gas-fired power stations on the River Po and hydroelectric plants are experiencing difficulties. The first half of the year ended with a 20 per cent drop in production compared with the same period in 2025.