There is no denying that Europe has higher energy prices than the US, but such generalisations fail to capture the full picture. In reality, several EU countries actually have more competitive wholesale electricity prices than the US, thanks to a combination of abundant flexibility resources and high renewables all within an open, competitive market. The correlation between gas and electricity prices is also declining in Europe, while growing stronger in the US.
So, given all the big talk about the EU-US relationship as of late, in this Friday Feature edition we will more closely examine the differences and similarities between the US and EU power markets. Talk about timely-ness!
The power price gap: a gas problem
US power is cheaper than most European markets because of structurally lower gas prices. Europe’s lack of natural gas resources and reliance on imports makes gas three to five times more expensive than in the US. Such a disadvantage in gas prices is unlikely to change, but the same can’t be said regarding electricity.
Capitalising on Europe’s strengths: clean and renewable power
The US, much like the EU, has great regional disparities. Between 2020 and 2024, average electricity prices in Norway, Sweden and Denmark were consistently lower than some of the main markets in the US – such as Pennsylvania-New Jersey-Maryland (PJM) – thanks to abundant hydropower resources within an open and unregulated market.
Beyond the Nordics, from 2020 to 2024 we saw the general electricity-to-gas price ratio decline by a factor of x2.3 in Europe while increasing by x3.4 in the US. This means that the US relies significantly more on gas for generating power than Europe, who, in 2024, recorded its cleanest power generation mix yet, with a 48% and 24% share in renewables and nuclear respectively.
If Europe continues to lower gas imports, deploy more renewables, boost system flexibility and keep integrating its electricity market, such a trend is likely to continue.
Capitalising on Europe’s strengths: industrial flexibility
Another solution that can help lower electricity prices would be to ramp up industrial flexibility. Not every industrial segment needs continuous electricity supply. Moving industries’ power consumption to off peak hours – when electricity is cheaper and the grid is less congested – can considerably lower power prices, without drastically impacting industrial output.
Further to this point, an analysis of spot prices provided by ENTSO-E demonstrates that in Finland industries could benefit from an average electricity spot price of €30 per megawatt hour (MW/h) if they were to avoid using power during just 10% of the most expensive hours.
Capitalising on Europe’s strengths: liberalised markets and interconnected grids
Furthermore, Europe possesses additional competitive advantages vis-à-vis the US. The EU boasts more efficient electricity markets thanks to liberalisation. This incentivises both consumers and producers to participate in the market, stimulating competition. As a matter of fact, the state of Washington and its vertically integrated market (i.e. not competitive) has higher electricity prices than most EU liberalised markets – according to the US Energy Information Administration (EIA).
Furthermore, the EU’s highly interconnected electricity grid ensures a more stable electricity supply and minimises the duration of blackouts. According to the system average interruption duration index (or SAIDI for short), blackouts last on average 0.9 hours in Europe, while reaching more than 10 hours in the US. This is a significant benefit for energy- intensive industries, whose continuous processes require a stable power supply 24/7.
The power of strategy: Europe’s edge in the energy transition
All in all, while Europe’s reliance on imported gas poses ongoing challenges, its strategic investments in renewable energy, industrial flexibility and integrated markets are reshaping the continent’s energy landscape and giving it some underappreciated advantages when compared to the US.
By prioritising clean power generation, incentivising off-peak consumption and fostering competitive, interconnected grids, Europe is not only reducing its exposure to volatile gas prices but also building a foundation for long-term affordability and sustainability. These efforts position the EU, especially at a time when the US is taking a big step back, to lead in the global transition to clean energy systems, proving that innovation and collaboration can turn structural disadvantages into competitive strengths. As the continent continues to decarbonise and optimise its markets, Europe’s energy future looks increasingly bright a testament to the power of policy foresight and technological ambition.
This blog post was originally published as part of Eurelectric’s LinkedIn Friday Features. Subscribe here to stay updated and never miss an edition.
Disclaimer: This article is for communication purposes only and may not reflect Eurelectric positions. Any positions taken in this article shall not be attributable to Eurelectric’s official positioning. Official Eurelectric positions are reflected only in position papers published here.