The year 2025 continued the trends seen in 2024 in electricity markets, with falling forward prices, stable average spot prices (+5%) but an increase in daily spreads (+18%), and more than 8% of the time with zero or negative prices. These price developments are driven by several physical fundamentals:
- Renewable energy is expanding massively across many European countries, creating surplus periods, particularly midday in spring and summer;
- Electrification of end uses is still progressing too slowly to absorb these surpluses;
- Gas remains the marginal reference for electricity generation when renewables are absent, leading to high peak-hour prices;
- France, in particular, is experiencing abundant electricity production. It is the only European country (excluding Nordic countries) with a 2027 calendar price below €50/MWh (vs. over €80/MWh in Germany, Switzerland, Italy, and the UK). Capacity prices in France are expected to remain low given this supply-demand balance.
In addition, the tariff and regulatory environment will continue to evolve rapidly in 2026; key points to monitor include:
- The impacts of TURPE changes, with shifts in off-peak/peak hours, enabling better alignment of certain consumption profiles (e.g., hot water) with favorable production periods (midday in summer);
- Adapting to changes in balancing mechanism rules (NEBCO, certification, etc.), which allow more flexibility assets—especially distributed ones (heating, hot water, air conditioning)—to achieve economic profitability by participating in markets;
- The consequences of the post-2026 capacity mechanism, potential demand-side flexibility support schemes, and their impact on business models.
This market and regulatory context should become increasingly favorable to demand-side flexibility development in 2026, particularly in:
- Electric boilers, profitable in many industrial contexts thanks to the growing number of negative-price hours, enabling heat decarbonization, increased electricity consumption during surplus periods, and flexibility provision at other times. Adding thermal storage can enhance relevance by maximizing heat production during low or zero-price hours;
- Smart EV charging (including V2G), continuing the trend of offers designed to reduce charging costs (e.g., Mobilize Smart Charge, Octopus) and even remunerate participants;
- Demand flexibility in commercial and secondary sectors, which benefit from market evolution thanks to their ability to deliver short, rapid, and regular load reductions without impacting comfort. Economic profitability is not always sufficient for large-scale deployment, and this flexibility could benefit from marketing innovations to unlock its potential;
- Battery storage, growing rapidly in many European countries, with behind-the-meter use cases maximizing value (vs. standalone models) and accessing increasingly scarce grid connection capacity.
E-CUBE has developed strong expertise in flexibility through its recent projects and the experience of its consultants. We would be delighted to discuss these market perspectives and opportunities with you. Please feel free to contact the experts below to schedule a conversation on the topic.
