Energy prices squeeze European industry as datacenters push up US power costs

Wholesale electricity in PJM Interconnection, the largest US power market, cost $136.53 per megawatt-hour in the first quarter of 2026, up from $77.78 a year earlier. That is a 75.5 percent rise.

Monitoring Analytics, the grid's official watchdog, blames datacenter load growth for tight supply, high prices and the forecast demand that keeps pushing them higher. The market monitor is blunt about the cause, and its report, published on Thursday 14 May, does not stop at diagnosis. "But for data center growth, both actual and forecast, the capacity market would not have seen the same tight supply demand conditions," it states. It adds that the price impacts on customers "have been very large and are not reversible" and will grow larger unless the datacenter load problem is addressed in timely fashion. PJM serves all or parts of 13 states and the District of Columbia, including Northern Virginia, home to the densest datacenter cluster in the world.

PJM told The Register it is working with states and member companies on consumer impacts, citing market caps, transmission projects and wholesale market rule reforms. Monitoring Analytics wants something simpler: datacenters should bring their own generation. It argues the proposed one-time backstop auction would "generally shift significant risk to other PJM customers" and that residential, commercial and industrial users "should not be treated as a free source of insurance, or collateral, or financing for data centers."

Europe's bill looks different, and older

On this side of the Atlantic, the pain is not new. It is structural, and it is now visible in factory closures.

Playmobil has ended all figure production in Germany, closing its Dietenhofen plant in Bavaria and consolidating manufacturing at existing sites in Malta and the Czech Republic. Around 350 jobs are affected. The final shift ended this week, with remaining employees on paid leave before the official shutdown at the end of June, Brussels Signal reported on 24 June. The Horst Brandstätter Group, which owns Playmobil, cited sharply rising production costs in Germany, naming high energy prices alongside elevated wages and ancillary labour costs. Unions called the move a "catastrophe" for the region. The company has faced declining sales and financial pressure for years, but management was clear that the cost environment had become unsustainable for labour-intensive plastic injection moulding. Administrative and logistical functions stay in Germany. The actual figures will not.

Germany's household electricity prices remain among the highest in the world, currently the fifth most expensive globally and the second highest among major industrial nations, according to Brussels Signal. Energy-intensive processes have been exposed since the 2022 energy crisis despite partial government relief. The outlet links the pressure to a rapid shift away from nuclear and coal without sufficient baseload alternatives, plus bureaucracy and wage costs, a mix some economists describe as creeping deindustrialisation.

Households are switching, unevenly

Consumers, at least, are responding to price signals. Residential heat pump sales rose 17 percent year on year across 11 European countries in the first quarter of 2026, according to the European Heat Pump Association. Around 575,000 units were sold from January to March, up from 494,000 a year earlier. France, Germany and Poland averaged 25 percent growth, with national experts pointing to rising energy prices and energy insecurity after Iran closed the Strait of Hormuz on 2 March, which sharply pushed up gas and oil prices.

The average was dragged down by Austria, where sales fell 30 percent because government subsidies were absent. That detail matters more than the headline. It suggests the heat pump market is not simply riding a price shock; it is sensitive to policy support, which can vanish.

Paul Kenny, director general of the EHPA, 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 them rapidly.

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

Studies published in 2024 found heat pump and solar combinations become cheaper than gas heating within 11 to 14 years, and that air-source heat pumps rank among the cheapest residential heating options with or without solar. In Germany, public and political sentiment around heat pump policy has stayed volatile despite broad support for the technology, pv magazine reported on 4 May.

Two continents, two versions of the same problem. In PJM, the demand shock has a name and a growth curve, and the market monitor can quantify it. In Europe, the shock is older, spread across gas, oil and electricity markets, and it shows up as closed plants and shifting household budgets rather than a single year-on-year number. What connects them is who pays. Monitoring Analytics warns that without structural change, existing customers absorb the cost of new load. Playmobil's 350 workers in Bavaria are the other end of that sentence. And Austria's 30 percent heat pump decline is a reminder that when policy support is withdrawn, price signals alone do not always carry the transition.