Energy prices are rewiring European industry, from Playmobil to chip fabs

Playmobil stopped making its plastic figures in Germany in late June. Around 350 jobs are going at the Dietenhofen site in Bavaria. The Horst Brandstätter Group, which owns the brand, is consolidating production at existing plants in Malta and the Czech Republic. According to Brussels Signal, the company named high energy prices as the decisive factor, alongside elevated wages and ancillary labour costs. Administrative and logistical functions stay in Germany. The injection moulding does not.

The closure is small in headcount and large in signal. Playmobil spent decades marketing itself as a Made in Germany product. It is now the latest mid-sized manufacturer to conclude that running machines in Germany does not work.

Germany's household electricity prices are among the highest in the world, according to Brussels Signal: fifth most expensive globally and second highest among major industrial nations. Energy-intensive processes have been exposed since the 2022 energy crisis, and partial government relief schemes have not closed the gap. The country is shifting away from nuclear and coal without sufficient baseload alternatives. Add bureaucracy and wage pressure, and some economists now describe the result as creeping deindustrialisation.

When the equipment vendor sells nothing at home

A blunter data point arrived in the chip sector this week. Frank Heemskerk, an executive vice president at ASML, said the company is currently selling no chipmaking machines in Europe at all, according to SemiEngineering's weekly industry review. He cited insufficient investment and a lack of new fabs. Europe, he warned, risks falling further behind as the United States, China and India expand domestic chip production.

That is the same company that anchors Europe's claim to semiconductor sovereignty. If its order book in Europe is empty, the problem is not one factory or one subsidy round. It is the investment case for building anything that draws serious power.

Meanwhile the equipment and materials supply chain is tightening in ways that push costs up further. US and Japanese officials met to discuss yttrium and permanent-magnet bottlenecks. Chinese export controls still constrain critical-material supplies, and Chinese customs data show no US-bound shipments in January, May or June. The US Commerce Department issued a temporary rule restricting stockpiling of polysilicon and its derivatives ahead of Section 232 import measures that take effect on 4 December.

A demand shock that rewrote heating economics

Not every energy-price story in Europe is a closure story. Residential heat pump sales rose 17% year on year across 11 European countries in the first quarter of 2026, the European Heat Pump Association says, with France, Germany and Poland averaging 25% growth. Around 575,000 units were sold from January to March, up from 494,000 a year earlier.

The trigger was a supply shock rather than a policy push. Iran closed the Strait of Hormuz on 2 March, sharply pushing up gas and oil prices across Europe. National experts cited rising energy prices and energy insecurity as the key drivers, with the effect most pronounced from March onward. The overall average was held down by Austria, where sales fell 30% because government subsidies were absent.

"If your streaming service doubled its price then blocked its movies you'd find a better one," said Paul Kenny, director general of the EHPA. "Consumers have realized heat pumps are the solution when gas and oil are erratic in price and supply."

Kenny said the European Commission has outlined VAT and tax reductions and social leasing schemes for lower-income households in its energy crisis plan, and called on EU governments to implement those measures quickly. That is one route out: electrify the demand side so a gas price spike matters less. It requires capital upfront and a grid that can carry the load.

Transmission lines, and the risk of who pays

The load problem is sharpest in the United States, where the numbers are now large enough to read as a warning for Europe. Prices in PJM Interconnection, the largest US wholesale power market, rose from $77.78 per megawatt-hour in the first quarter of 2025 to $136.53 in the same period this year. That is a 75.5% year-on-year increase, according to Monitoring Analytics, the official market monitor, in its Q1 2026 state of the market report.

The monitor identified datacenter load growth as the primary reason for recent and expected capacity market conditions, including forecast load growth, the tight supply and demand balance, and high prices. It added that the price impacts on customers have been very large and are not reversible, and will be even larger in the near term unless the issues associated with datacenter load are addressed in a timely manner.

PJM told The Register that it is working with states and member companies on consumer impacts. It is extending market caps put in place since the 2025/2026 auction, authorising transmission expansion projects now in development, and reforming wholesale electricity market rules. Monitoring Analytics did not respond to questions. The monitor's preferred fix is that datacenters bring their own generation, with fast-track interconnection for those that do and a queue for the rest. It argues the currently proposed backstop auction would shift significant risk to other customers, and that residential, commercial and industrial customers should not be treated as a free source of insurance or financing for data centers.

Europe is heading into the same argument with less generation to spare. The immediate bill shows up as closed plants and empty order books. The delayed bill shows up in who pays for the wires.