In August 2026, severe drought and heatwaves hit multiple European countries, causing a sharp drop in hydropower and nuclear power output. Power grids were forced to switch to natural gas and coal to meet the surge in air-conditioning demand. This directly reversed the renewable-energy-dominated situation in July.
This is actually an old story—when extreme weather strikes, the intermittency and vulnerability of renewables become painfully clear. Hydropower depends on the weather, and nuclear power also has to reduce output due to problems with cooling-water temperatures. In the end, fossil fuels step in to fill the gap.
The ideal for the energy transition is rosy, but the need for backup capacity has never gone away in reality. In Europe, in recent years, the region has been calling for carbon neutrality while still relying on coal and natural gas to come to the rescue during extreme conditions. This structural contradiction is difficult to resolve in the short term. Building energy storage, smart grids, and cross-regional dispatch takes time and requires massive investment.
For commodity traders, this kind of seasonal volatility and the supply-demand mismatch caused by extreme weather are always trading opportunities. Price swings in natural gas and coal can be extremely sharp at times like this—especially European TTF for gas and API2 coal prices.
Remember this: energy security always comes first over the energy transition. Politicians can shout slogans, but grid dispatchers can’t afford to let the lights go out.
This is actually an old story—when extreme weather strikes, the intermittency and vulnerability of renewables become painfully clear. Hydropower depends on the weather, and nuclear power also has to reduce output due to problems with cooling-water temperatures. In the end, fossil fuels step in to fill the gap.
The ideal for the energy transition is rosy, but the need for backup capacity has never gone away in reality. In Europe, in recent years, the region has been calling for carbon neutrality while still relying on coal and natural gas to come to the rescue during extreme conditions. This structural contradiction is difficult to resolve in the short term. Building energy storage, smart grids, and cross-regional dispatch takes time and requires massive investment.
For commodity traders, this kind of seasonal volatility and the supply-demand mismatch caused by extreme weather are always trading opportunities. Price swings in natural gas and coal can be extremely sharp at times like this—especially European TTF for gas and API2 coal prices.
Remember this: energy security always comes first over the energy transition. Politicians can shout slogans, but grid dispatchers can’t afford to let the lights go out.