Europe spent roughly 427 billion euros importing energy in 2024, according to European Commission estimates drawn from Eurostat trade data. That figure is down sharply from the roughly 604-billion-euro shock of 2022, when Russian gas supplies collapsed, but it remains about 40 percent above the 300-billion-euro annual average that held for most of the previous decade. The gap, running into tens of billions of euros every year, represents money drained from wages, factory investment and public budgets, and it is now the single strongest argument driving Brussels to double down on wind and solar.
Gas markets tighten again
Just as policymakers hoped the worst was over, the first half of 2025 delivered a fresh reminder of Europe’s vulnerability. The International Energy Agency’s Q3 2025 gas market report identified three forces squeezing supply simultaneously: continued declines in Russian piped gas reaching the EU, slower-than-expected growth in global liquefied natural gas output, and heavy storage injection demand across the continent. European hub prices during that period ran above their first-half 2024 levels, reversing a downward trend and hitting industrial buyers and utilities already worn down by three years of volatility.
“We are not out of the woods yet,” Kadri Simson, the former EU Energy Commissioner, warned during a handover briefing in late 2024, a sentiment echoed by her successor Dan Jorgensen, who told reporters in early 2025 that the bloc’s gas supply outlook “demands continued vigilance.”
Compounding the price pressure is a structural currency exposure. The European Commission’s Directorate-General for Energy has promoted greater use of the euro in energy transactions, noting on its dedicated policy page that a large majority of the bloc’s energy imports are invoiced in US dollars. Every dip in the euro against the dollar inflates the real cost of LNG cargoes and crude oil shipments before a single molecule reaches a European terminal.
Cutting the Russian cord
On May 6, 2025, the European Commission published a roadmap to fully end EU dependency on Russian energy, targeting a complete halt to Russian gas imports by the end of 2027 and requiring member states to submit national phase-out plans before the close of 2025. The Council of the European Union subsequently approved a stepwise ban converting that political commitment into binding law, sending an unambiguous signal to global gas markets: pipeline flows from Russia will not return.
The legal move is significant because it removes the ambiguity that had allowed some member states, particularly those in Central and Eastern Europe with legacy pipeline contracts, to delay diversification. Under the new regulation, governments must now demonstrate concrete alternative supply arrangements or face infringement proceedings.
Renewables fill the generation gap
Wind and solar are absorbing much of the space vacated by fossil fuels in Europe’s power mix. The Agency for the Cooperation of Energy Regulators noted in its 2026 monitoring assessment that the two sources together supplied roughly 47 to 50 percent of all EU electricity generation through the end of 2025, building on the approximately 47 percent share ACER recorded for 2024. Solar capacity additions accelerated particularly fast across southern and central Europe.
“Solar is now the cheapest source of new electricity in most of Europe,” said Walburga Hemetsberger, chief executive of industry group SolarPower Europe, in a May 2025 statement accompanying the group’s annual market outlook. “The economics are doing the heavy lifting that policy alone could not.”
The legal backbone for that expansion is Directive (EU) 2023/2413, known as RED III, which sets a binding target of 42.5 percent renewables in the EU’s final energy consumption by 2030, with an indicative ambition to reach 45 percent. Alongside it, Council Regulation (EU) 2022/2577 created an emergency permitting framework that shortens approval timelines for new wind and solar projects, aiming to ensure that capacity additions outpace the decline in fossil imports.
On the ground, the effects are visible. Spain connected more than 10 gigawatts of new solar capacity in the two years through 2025. Germany’s offshore wind pipeline has swelled, and the Netherlands has emerged as a leading market for rooftop solar per capita. Grid operators across the bloc have been tasked with integrating a rapidly growing share of variable output, and several countries are expanding cross-border interconnectors so that surplus power in one region can offset shortages in another.
Consumers still feel the squeeze
Despite the macro progress, retail electricity and gas tariffs remain elevated in many EU countries compared with pre-crisis levels. Utilities are still recouping hedging losses from 2022 and passing through the cost of network upgrades needed to handle more distributed generation. Governments have scaled back the blanket subsidies and price caps introduced during the emergency, shifting to more targeted support for vulnerable households and energy-intensive industries such as steelmaking and chemicals.
“Our members are competing with one hand tied behind their back,” said Adolfo Aiello, deputy director-general of BusinessEurope, in an April 2026 policy brief on industrial competitiveness. “Energy costs in Europe remain structurally higher than in the US or China, and that gap is visible in every investment decision.”
That shift has sharpened political debates. In Germany, industrial electricity prices that remain roughly double those paid by US competitors have fueled calls for a subsidized “industry power price.” In France, the future of regulated tariffs tied to nuclear output is under review. Across the bloc, the question of who bears the cost of decarbonization, and how quickly the transition can proceed without hollowing out manufacturing, has become a central issue ahead of national budget cycles in 2026.
Trade data from Eurostat underscore the incomplete nature of the recovery. In the first quarter of 2024, EU energy imports totaled 95.5 billion euros and 183.8 million tonnes, with the value down 26.4 percent and the mass down only 10.4 percent year on year. Europe was importing nearly as much energy in physical terms; it was simply paying less per unit than at the 2022 peak. That distinction matters because it means the bloc’s exposure to the next price spike has not fundamentally shrunk.
Open questions for the months ahead
Several uncertainties could determine whether Europe’s energy transition accelerates or stalls over the coming months.
The transatlantic price gap. ACER’s monitoring data show that EU electricity prices were structurally higher than US prices through the end of 2025, but the precise size of the differential and its trajectory into 2026 are not yet quantified in publicly available primary data. Whether that gap widens or narrows will shape investment decisions by manufacturers weighing European operations against American alternatives, particularly in sectors like green hydrogen and battery production where electricity is a dominant input cost.
Permitting bottlenecks. RED III requires member states to translate the EU-wide 42.5 percent target into national deployment plans, yet comparable data on project approval rates, grid connection queues and permitting timelines under the emergency framework have not been aggregated at the EU level. Local opposition to onshore wind, in particular, remains a significant drag in parts of Germany, France and Italy. Without faster permitting, legal targets risk becoming paper commitments.
Replacement LNG supply. The 2027 deadline for ending Russian gas imports depends on sufficient alternative volumes reaching European terminals. Construction schedules for new export capacity in the United States, Qatar and East Africa are not fully aligned with the EU’s timeline, and long-term contract negotiations remain opaque. If replacement supply is delayed or diverted to Asian buyers willing to pay more, Europe could face renewed price spikes during winter demand peaks.
Storage strategy. The experience of 2022 and 2023 prompted the EU to set binding minimum filling levels for gas storage ahead of each winter. High targets calm markets and reduce shortage risk, but they also increase demand during the injection season, potentially pushing up summer prices and squeezing smaller buyers who lack the balance sheets to compete for storage capacity.
New dependencies. Rapid electrification of transport, heating and industry will increase overall power demand even as efficiency gains moderate growth. If renewable deployment and grid reinforcement fail to keep pace, the bloc could trade one form of vulnerability for another: dependence on imported solar panels, wind turbine components and critical minerals such as lithium and rare earths, or grid congestion that forces operators to curtail clean generation.
Europe’s import bill versus its deployment race
The verified data through early 2026 paint a picture of a continent that has survived the acute phase of its energy crisis but has not yet escaped the chronic one. Europe’s annual energy import bill remains tens of billions of euros above its pre-2020 baseline. Gas markets are tighter than they were a year ago. And the political commitment to sever the last Russian supply links by 2027 leaves little room for delay in building out alternatives.
Wind and solar deployment, faster permitting and cross-border grid investment are no longer aspirational goals; they are the bloc’s primary strategy for bringing costs down and keeping factories running. The decisions taken by national governments over the next 18 months, on permitting reform, grid spending and industrial support, will determine whether that strategy delivers or whether Europe enters the next decade still paying a premium for energy it could be generating at home.
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*This article was researched with the help of AI, with human editors creating the final content.
