Europe’s energy problem is no longer simply the story of crisis-era price spikes. In 2026, energy costs remain tied to industrial competitiveness, inflation, public budgets and import dependence – while renewed geopolitical shocks show how expensive that dependence can become.

Key Takeaway

Europe’s energy burden has two layers. The first is the direct price of energy. EU wholesale gas and electricity prices have fallen from the peaks of the 2021–2023 crisis but remain above historical averages, while retail prices for households and businesses are still higher than before 2021. The second burden is structural: Europe continues to depend heavily on imported fossil fuels and on global LNG and oil markets.

The 2026 energy shock exposed that vulnerability again. The European Commission’s spring forecast put announced national fiscal measures to cushion high energy prices at about €14.5 billion. By late September, the EU energy commissioner said the bloc had paid roughly €100 billion more for fossil energy during the year without receiving additional volumes.

Europe is not simply back in 2022. Renewable deployment, supplier diversification and lower gas demand have improved resilience. But renewed volatility shows that affordability, security and decarbonisation still have to be managed together.

Why energy remains a competitiveness problem

The European Commission’s latest energy-price assessment shows that the EU energy import bill fell from a €604 billion peak in 2022 to €427 billion in 2024. That is a major improvement, but still a large economic outflow. Industrial gas and electricity prices, although below crisis peaks, remained around two to four times higher than in major EU trading partners.

The pressure is most visible in energy-intensive sectors such as chemicals, metals, glass, ceramics and fertilisers. For these industries, energy is not a peripheral overhead; it is a core component of production cost and therefore influences margins, investment location and final prices.

The European Power Benchmark averaged €85/MWh in 2025, 9% above 2024 but 14% below 2023. National outcomes varied sharply, from roughly €41/MWh in Finland to €116/MWh in Italy. There is therefore no single European energy price: generation mix, grids, interconnections, taxes and national market design all shape the burden.

LNG improved diversification but increased exposure to global competition

As Europe reduced its dependence on Russian pipeline gas, liquefied natural gas became more important. This strengthened diversification: cargoes can arrive from multiple producers and a disruption to one pipeline no longer creates the same physical concentration risk.

But LNG also connects Europe more directly to global competition. European buyers increasingly compete with Asian markets for flexible cargoes. The Commission’s 2026 analysis notes that the shift toward global LNG has changed gas-electricity price dynamics and increased volatility. Financial Times reporting in September described intensifying competition for LNG as Europe sought additional winter supply.

Energy security therefore means more than the number of suppliers. Terminal capacity, storage levels, shipping routes, Asian demand and Europe’s ability to reduce or substitute gas consumption all matter.

Energy is also an inflation and fiscal issue

Higher energy prices move through the economy via transport, production and household bills. Companies may absorb part of the shock in margins or pass it through to customers. If high prices persist, they can also influence inflation expectations and wage bargaining.

Governments face a second channel: fiscal support. The Commission estimated announced 2026 measures at €14.5 billion. If those measures were extended through the end of the year, its scenario put the cost at €38.6 billion. That figure is not an observed expenditure; it is a scenario illustrating how quickly an energy shock can become a budgetary burden.

Why subsidies alone are not a durable solution

Price support can protect households and companies in the short run, but broad long-term subsidies face three constraints: fiscal cost, weaker incentives to conserve energy and potentially weaker investment signals for efficiency and new supply.

The EU response therefore combines several tools: attempts to reduce electricity taxes and system costs, faster electrification, renewable deployment, stronger grids and storage, and lower exposure to imported fossil fuels. The 2026 Electrification Action Plan also aims to narrow the price gap between electricity and gas by 2030.

Europe’s central paradox

Europe needs more electricity and cheaper electricity at the same time. Electrifying transport, heating and industry raises demand, while competitiveness requires lower and more predictable costs. Renewables reduce fuel-import exposure, but using them efficiently requires networks, storage, demand flexibility and stronger interconnections.

The cost of the transition therefore cannot be judged only by the generation cost of wind and solar. Grid expansion, balancing, storage and system flexibility are part of the economic equation. The objective is not simply more renewable capacity but a system that is simultaneously affordable, reliable and less exposed to imported fuel shocks.

What this means for Georgia

Georgia is not part of the EU electricity market, so European prices do not pass directly into Georgian tariffs. Nevertheless, European energy shocks matter through international oil and gas prices, regional electricity trade and changes in European industrial competitiveness.

Georgia’s electricity system has a very different structure. GNERC data show 13.84 billion kWh of domestic generation in 2025, of which 10.99 billion kWh came from hydropower. According to BTU researchers’ calculations, hydropower represented about 79.4% of generation, while thermal plants accounted for about 20.0%. Wind and solar remained small contributors.

Electricity imports reached 1.56 billion kWh in 2025, up from 1.23 billion in 2024. According to BTU researchers’ calculations, that was a 26.9% increase. Imports represented about 10.3% of total supply in 2025, compared with about 8.1% in 2024. This does not establish a permanent trend: hydrology, demand, exports and seasonal conditions can materially change the annual balance.

Georgia’s opportunity: use its own structure rather than copy Europe

Georgia’s most important structural difference is its hydropower resource. More domestic renewable generation can reduce import needs in some periods and expand regional trading opportunities. But hydropower is seasonal, so adding capacity does not automatically eliminate winter deficits.

Economic value is greater when new generation is combined with grid reinforcement, storage, demand flexibility and regional interconnections. Solar and wind can diversify the seasonal portfolio, while storage and flexible consumption can improve system management.

Europe also offers a broader lesson: energy competitiveness is not only about the lowest tariff today. Businesses value predictability, security of supply and access to longer-term contracts. For an energy-intensive investor, those factors may matter as much as the headline price.

Risk: global shocks reach Georgia through different channels

Georgia imports a significant share of its petroleum products and natural gas. Global price increases can therefore affect transport, heating and thermal power costs. The pass-through is not automatic: contracts, suppliers, exchange rates, inventories and regulated tariffs all matter.

For that reason, mechanically transferring a European price shock into a Georgian price forecast would be misleading. The more accurate conclusion is that the same global shock reaches the two markets through different channels: LNG and industrial electricity are especially important in Europe, while imported fuels, gas, seasonal electricity balances and the exchange rate are important for Georgia.

BTU Researchers’ Assessment

According to BTU researchers’ assessment, Europe’s deeper energy burden is no longer simply that energy is expensive. It is the simultaneous management of price, security and industrial competitiveness. Replacing imported fossil fuels with domestic low-carbon energy can reduce part of the long-term external vulnerability, but it requires infrastructure investment that must ultimately be financed within the system.

For Georgia, the relevant strategic question is not whether the country can always offer energy that is ‘cheaper than Europe’. It is whether domestic generation, grids, seasonal flexibility and regional trade can develop in a way that makes energy costs predictable and supply reliable for business.

Conclusion

Europe’s energy burden did not disappear when the 2022 price extremes eased. Costs for households and industry remain elevated, while the 2026 shock demonstrates that dependence on globally traded fossil fuels still creates expensive vulnerability.

Europe’s response is gradually shifting from emergency support toward structural change: more domestic clean energy, electrification, stronger grids, storage and deeper market integration. Georgia should not copy that model mechanically, but the lesson is relevant: energy competitiveness is built through diversified supply, flexible infrastructure and lower exposure to external shocks.

Data and Main Sources

European Commission – Energy prices and costs in Europe; Electricity prices; 2025–2026 EU gas and electricity market reports; Spring 2026 Economic Forecast; Electrification Action Plan.

Financial Times – Europe braces for LNG tug of war with Asia; EU discusses oil stocks release as fuel costs surge, September 2026.

GNERC – Georgia electricity supply and consumption actual balances, 2024–2026.

Geostat – Energy Balance of Georgia and Energy Statistics Portal.

Prepared by the academic team of Business and Technology University and the BTUAI Research Team, Tbilisi, Georgia.