While wholesale electricity prices have remained at elevated levels since 2021, they rose sharply from around EUR 180 per MWh in May to peak at more than EUR 400 per MWh in August. Wholesale prices generally do not have an immediate impact on consumption for three main reasons. First, the cost of the electricity is only one of the many components in the final bill. Second, most EU countries provided support to electricity consumers – including energy-intensive industries, businesses and households – through various measures. And third, price fluctuations often take time to filter down directly to households and consumers. Whereas dependence on short-term price dynamics varies across sectors and countries, most consumers have limited direct exposure to spot markets and are subject to longer-duration tariffs that are adjusted after a period of time. Soaring wholesale prices in 2022 meant that the cost of electricity for consumers eventually rose substantially towards the end of the year. Many energy-intensive industries – such as chemicals, aluminium and steel production – further reduced their output in the second half of 2022.

Other non-weather-related factors contributing to the demand decline in 2022 also deserve attention. As highlighted in recent IEA work, these factors include behavioural changes in consumption in the residential and services sectors, voluntary energy savings as part of government-led public campaigns, affordability issues impacting the most vulnerable households, and efficiency improvements across a range of different sectors.