July heat threat keeps European power prices elevated

European energy markets remain under pressure as the continent enters July with power prices elevated and natural gas futures climbing, after weeks of record-breaking heat that drove electricity costs to levels not seen since the 2022 energy crisis.

Heat-Driven Price Surge

French evening power prices climbed to their highest since the energy crisis of 2022 during the late-June heatwave, according to Bloomberg Euronext N.V., as a combination of surging cooling demand and constrained supply strained electricity systems across the continent. The Financial Post reported on July 2 that the threat of further July heatwaves is expected to keep European power prices elevated.financialpost+2

Dutch TTF ICE Futures Europe ↗ 1.14% natural gas futures, Europe's benchmark, traded near €43/MWh at the start of July, after rising from around €40.78 at the end of the prior week. The rally has been fueled by soaring temperatures that amplified electricity demand for air conditioning and forced power generators to burn more gas to compensate for reduced nuclear and hydroelectric output.mezha+3

A study by 350.org estimated that households, services, and industry in Germany and France spent an additional €731 million on electricity during just one week of the heatwave from June 21 to 27.350+1

Storage Levels Raise Winter Concerns

Europe's gas storage position remains a source of anxiety. Energy Aspects reported that EU storage stood at 50 billion cubic meters, equivalent to 46% of capacity, on June 23 — some 10.6 bcm below the same point last year and 15 bcm below the five-year average. The continent entered 2026 with its lowest storage levels since 2018, according to Columbia University's Center on Global Energy Policy, after a harsh winter and disruptions to LNG shipping through the Strait of Hormuz curtailed imports.anasalhajjieoa.substack+2

The EU's mandatory storage target has been relaxed from 90% to 80% for the 2026 winter under ACER flexibility provisions, but even this lower bar appears challenging. Reuters reported in April that EU nations are likely to miss their pre-winter filling requirements.reuters+1

Structural Vulnerability Exposed

Since late May, Europe has been struck by successive heatwaves that have broken temperature records in more than a dozen countries. The World Health Organization said more than 1,300 excess deaths linked to high temperatures had been recorded across Europe since June 21. Analysts note the energy impact extends beyond short-term price spikes — Eurostat data shows household energy consumption for cooling has roughly doubled across the EU since 2015.euronews+1

The combination of low storage, constrained LNG supply, and the prospect of continued summer heat leaves TTF pricing elevated through the third quarter, with the market needing to attract flexible LNG cargoes away from Asian buyers.energyaspects