Wholesale electricity prices in the United States are forecast to average $52 per megawatt hour across 2026, an 11% increase over 2025, according to a new analysis examining why power costs are climbing despite expanding generation capacity. Spot wholesale prices in the European Union and Japan surged more than 30% year-on-year in the second quarter, while India's day-ahead prices more than doubled in September. The increases stem from higher fuel costs, extreme weather events, and accelerating demand that the International Energy Agency expects to grow 3.6% globally this year, up from 3% in 2025.
The price changes vary sharply by market. Within the US forecast, the PJM hub jumped 41% while Northwest Mid-Columbia fell 23%, and residential tariffs are expected to climb from 17.3 cents per kilowatt hour to 18.2 cents. India's day-ahead prices on the Indian Energy Exchange rose 105% in September to ₹7.3 per unit as buy bids surged 281%. Australia moved in the opposite direction, cutting regulated residential prices by 3.4% to 7.2% across New South Wales and south-east Queensland from July 1. In Spain, the average price captured by solar facilities dropped from €36.39 per megawatt hour across 2025 to €29.68 in the first half of 2026, while day-ahead prices fell below zero in 16% of first-quarter trading hours. On September 27, Spanish prices dipped below zero between 1 p.m. and 2 p.m., then reached €185.26 per megawatt hour at 9 p.m.
The report attributes most of the US increase to winter storm Fern and an unusually hot July, which lifted third-quarter consumption roughly 4% year on year. Disruption to liquefied natural gas shipments through the Strait of Hormuz pushed European and Asian gas to the highest levels since the 2022-23 crisis, and gas-fired plants set the clearing price for much of the day in both regions. India's peak consumption reached 269 gigawatts on September 10 amid intense heat and industrial use, and Tamil Nadu's utility agreed in October to buy emergency power at ₹33.37 to ₹37 per unit for the six hours between 6 p.m. and midnight alone. The analysis counts more than 2,500 gigawatts of renewable, storage, and large-load projects stalled in connection queues worldwide, with annual grid investment of roughly $400 billion needing to rise about 50% by 2030.
The underlying pressure comes from demand growth that no longer tracks the economic cycle, driven by industry, cooling, electric vehicles, and expanding data centre capacity. Solar output disappears after sunset just as household demand climbs, and wind generation can't be counted on at the evening peak, creating a timing mismatch that pushes prices higher during the hours when people need power most. Grid projects take five to fifteen years to plan and build, against one to five for a wind or solar farm, so capacity that can't connect can't compete to discipline prices. Those network costs reach customers directly through transmission and distribution upgrades, which is why retail prices climb even where wholesale hub prices stabilise. Markets exposed to imported gas, ageing networks, and thin evening capacity are paying more, while those that added solar, storage, and flexible supply are paying less—a split the report says will hold into 2027 whatever winter delivers.