Europe's energy price squeeze: industry cuts back as fuel costs climb

On Monday, The Guardian's Australia live blog reported that the national average petrol price had risen more than 10 cents a litre in a week to 237.5c/L, citing the Australian Institute of Petroleum. Diesel climbed more than 13 cents to 286.7c/L. The piece, updated on 28 September, linked the surge to crude oil supply disruption and Ukrainian attacks on Russian refineries. It also noted that AMP chief economist Shane Oliver has warned petrol could pass $2.70/L.

That is one national market. The same pressure is visible across Europe.

Europe's problem is not a single number. It is a compound squeeze: high wholesale energy costs, factories deciding that production in Europe no longer pays, and a policy apparatus still arguing about subsidies while the industrial base quietly shrinks. In the last week alone, the headlines from the continent have been dominated by plant closures, price warnings and one awkward fact. The companies meant to build Europe's clean-tech future are increasingly buying their equipment from China.

Fuel costs climb while demand stays flat

Australia is a useful proxy. Its market is not identical to Germany's or Italy's, but it shows how quickly a supply shock moves into household budgets and then into central bank decisions. The Reserve Bank of Australia is expected to lift the cash rate from 4.25% to 4.6% at its meeting on Tuesday, according to the Guardian's live coverage. That would be the fourth increase this year. The logic is straightforward: fuel drives costs across goods and services, inflation stays sticky, and rates go up.

Economists quoted in the same report tied the crude price rise to the ongoing conflict between the US and Israel against Iran, and to Ukrainian attacks on Russian refining capacity. Those are not European events, but they set the price at which European industry buys its energy. That price has been high for long enough that the decisions are becoming structural rather than cyclical.

One recent example: Inspenet reported on 27 September that Ineos will shut down three chemical plants because of high energy costs. The story is a single line in a crowded news cycle, but it is the kind of line that matters. When a chemical company closes capacity in Europe, it is not waiting for next quarter's gas price. It is deciding that the long-run cost structure does not work.

Solar prices rise, but so do module prices

The clean-energy side of the story is not immune. On 25 September, pv magazine reported that Chinese inverter and storage manufacturer Growatt will raise prices for string inverters, hybrid and storage inverters, commercial and industrial storage cabinets and residential storage systems by around 5% to 10% from 8 October. The company blamed higher raw-material costs, tighter supplies of core components and rising manufacturing expenses.

That followed Sungrow, which had already raised prices by around 5% to 15% for several solar inverter categories from 20 September, according to the same pv magazine brief. The two moves together suggest that the cost pressure is not confined to oil and gas. It is moving through the electrical supply chain that Europe depends on for its energy transition.

In the United States, the picture is sharper still. Anza, a solar and storage data company, expects at least a 40% spike in US solar module prices after a Section 232 tariff on polysilicon products takes effect on 4 December, pv magazine reported on 26 September. The median price for imported modules was $0.27/W before the August 7 proclamation and is now $0.38/W for delivery after 4 December among suppliers that have repriced. Anza's advice to developers is to move now: secure modules already in the US, accelerate imports, or shift procurement strategy.

"Developers need to understand what is available now, at what price and on what terms, and move quickly on the strategy that makes the most sense for their project," said Aaron Hall, president of Anza, in a statement carried by pv magazine.

The US case is not Europe's, but the mechanism is the same. Trade barriers, supply constraints and raw-material costs all push in one direction. For European developers, the added complication is that the EU is trying to build a domestic manufacturing base and to keep energy affordable at the same time. Those two goals are not always compatible.

The manufacturer that sold nothing in Europe

The most striking data point of the week came from ASML, the Dutch company that is Europe's largest by market capitalisation and the world's only supplier of extreme ultraviolet lithography systems. On 25 September, Tom's Hardware reported that ASML sold no lithography equipment in Europe in 2026. Europe accounted for 1% of ASML's revenue in 2025, 5% in 2024, 4% in 2023 and 2% in 2022. In the first two quarters of 2026, it was 0%.

"We are selling absolutely nothing in Europe," said Frank Heemskerk, ASML's executive vice president of public affairs, speaking at a panel discussion at De Balie in Amsterdam. "Because Europe is not investing and because no chip factories are being built in Europe. That is genuinely worrying."

Heemskerk's argument is that Europe has focused on subsidising supply, in the form of fab construction, without doing enough to guarantee demand for European-made chips. "We should do much more to create demand," he said, adding that ASML is talking to European Commission President Ursula von der Leyen about harnessing Europe's market power.

The same week, SemiEngineering's Chip Industry Week In Review, published on 25 September, noted that the US Commerce Department had issued a temporary rule restricting stockpiling of polysilicon and its derivatives ahead of the Section 232 measures taking effect on 4 December. It also reported that Chinese authorities are reviewing the use of Broadcom networking technology in state-controlled data centres, and that the SIA says China is targeting 80% chip self-sufficiency by 2030 with a 20% price advantage for qualifying domestic products in government procurement.

Those are not energy stories in the narrow sense. But they are energy-adjacent in the way that matters. Chip fabs are among the most electricity-intensive facilities ever built. If Europe is not building them, it is not just losing the semiconductor race. It is also losing the demand that would justify new power infrastructure.

The political argument that has not settled

Europe's tech industry, meanwhile, is pushing back on a different narrative. On 24 September, POLITICO reported that European tech leaders and cybersecurity experts are increasingly vocal in rejecting US-generated warnings about AI extinction risks. "Sadly, it has jumped up to the Terminator is coming," said James Wise, a partner at Balderton Capital and chair of the UK government's sovereign AI fund. "I don't think the Terminator is coming at all."

The AI debate may seem distant from energy prices, but the same question links the two: where does Europe's industrial investment go next? Data centres need power. Power prices in Europe are high. The POLITICO piece notes that leaders from 22 nations adopted a declaration on Monday saying AI must remain under human direction, oversight and control. It does not mention who pays for the electricity.

That gap between political declarations and industrial reality is where the European story sits. The European Commission has been active: it adopted a declaration on AI, it is in talks with ASML about demand-side measures, and it has warned that US diesel export curbs could deepen Europe's energy price pressures, according to a 24 September report cited in recent headlines. But the plant closures continue, the fuel prices continue, and the manufacturers continue to look elsewhere for growth.

On 26 September, El Pais published a long piece on the electric bicycle industry that, read closely, is about the same problem. European manufacturers, the article says, have lost the ability to explain their products simply, and are now dependent on Chinese motors from Avinox, a DJI subsidiary. "China has won the battle," a Spanish bike brand manager told the paper. The parallel is not perfect, but the pattern is familiar: European industry excels at engineering, struggles at commercial storytelling, and then finds itself buying the critical component from abroad.

Energy prices are the backdrop to all of it. They are not the only reason Ineos is closing plants or ASML is selling nothing at home. But they are the reason that every other decision becomes harder. And with crude prices still elevated, the pressure is not letting up.