Cătălin Stancu,
Associated Senior Expert, Horvath Romania
For more than four years, Romania has been facing an energy price crisis triggered by the war in Ukraine and the resulting disruptions in natural gas supply across Europe. While the initial shock has subsided, the structural drivers of high electricity prices remain firmly in place.
Romania continues to rank among the EU countries with the highest day-ahead electricity prices, alongside Italy, Hungary, Greece and Bulgaria. In 2025, the average price reached €108/MWh, placing Romania among the most expensive markets in the Union. By comparison, prices ranged between €35 and €51/MWh in the Nordic countries, €61/MWh in France and €65/MWh in Spain.
This divergence reflects a structural issue across much of Central and Eastern Europe. Although fossil fuels represent a limited share of the electricity mix, they continue to set the marginal price in most hours. As highlighted by the Draghi Report, gas-fired generation accounted for around 20% of the EU’s electricity mix in 2022, yet determined prices in nearly two-thirds of trading periods. In practice, both gas volatility and carbon costs are transmitted directly into electricity prices.
With carbon prices at approximately €77/tCO2 and natural gas averaging €33/MWh in 2025, recent geopolitical tensions, including the conflict involving Iran, have pushed gas prices closer to €42/MWh in 2026. At this level, efficient CCGT plants operate near €100/MWh marginal cost. Whenever fossil fuels set the marginal unit, even in small quantities, prices tend to align around this level.
Romania’s Energy Strategy envisages the addition of approximately 4.3 GW of gas-fired capacity, against a peak demand of around 9.3 GW. However, Horvath Romania simulations up to 2040 suggest that, under the current strategy, electricity prices are likely to remain broadly at today’s levels. The current trajectory risks preserving, rather than correcting, Romania’s structural cost disadvantage. This raises a fundamental question: how should Romania best capitalize on its strategic natural gas reserves in the Black Sea?
Natural gas is undoubtedly a valuable asset. Yet using it predominantly for baseload generation risks locking the country into structurally elevated prices. A more efficient approach is to prioritize higher value-added uses, such as industrial applications, while limiting gas-fired capacity to system adequacy.
Spain provides a compelling counterexample. Once part of Europe’s high-price cluster, it has significantly reduced its reliance on fossil fuels. Coal has been phased out, gas generation has become marginal, and solar photovoltaic capacity has expanded nearly ninefold, reducing exposure to gas price volatility.
Empirical data reinforce this picture. The correlation between gas and electricity prices remains close to one- to-one, highlighting the vulnerability of power markets to external shocks.
In an increasingly volatile geopolitical environment, where energy is often used as a strategic lever, reducing this dependency must become a priority. The objective is not to eliminate natural gas, but to redefine its role in a way that shields consumers and industry.
A system built on large-scale renewable generation, particularly solar PV, combined with storage and capacity mechanisms that retain gas as backup offers a credible pathway toward lower and more stable electricity prices. More broadly, Romania’s Energy Strategy should emphasize a single core objective, minimizing electricity costs while ensuring sustainability and security of supply.
This requires realistic demand projections, economically grounded technology choices, feasible timelines, transparent financing and robust scenario-based modeling, supported by strong execution discipline. It also requires consistent policy signals and regulatory predictability to enable investment at scale and reduce perceived risk across the energy value chain.
Ultimately, competitive energy prices are not merely an energy policy concern. They are essential for industrial competitiveness, investment attractiveness and social welfare. Without affordable and predictable energy, Romania risks missing a critical opportunity for long-term development and convergence within the European Union.
