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Reports Drained reserves: European electricity market summary Q3 2026

Drained reserves: European electricity market summary Q3 2026

Low hydropower leaves Europe’s power system exposed heading into winter.

This report from Montel’s power market analysts reviews how Europe’s electricity market performed between July and September 2026. Extreme heat and very low rainfall drained rivers and reservoirs, cutting hydropower generation to its lowest quarterly total since Montel’s records began in 2015. The report explains how this, alongside curtailed nuclear output and high gas prices, pushed day-ahead prices to their highest levels since 2022, and what depleted reservoirs and low gas storage could mean for prices in Q4.

“

I think of Europe’s hydropower reservoirs as the electricity sector’s savings account. It’s there if needed, to be drawn down in an emergency.

”
Jean-Paul Harreman, Director, Montel Analytics

Q3 2026 at a glance

  • Hydropower generation: 84.8 TWh, the lowest quarter since 2015 and 13% below Q3 2025

  • Run-of-river output: down 71% in Austria, 31% in France and 30% in Italy year on year

  • Solar generation: a record 135.0 TWh, 24% higher than Q3 2025

  • Renewable share: 53.4% of total generation, while the clean-power share fell to 74%

  • TTF gas: averaged €63.56/MWh, 49% above Q3 2025

  • Demand: 694.2 TWh, the highest Q3 total since 2022

Inside the report

  • Hydropower at a low. How drought and heat cut hydro output to its lowest quarterly total since 2015, and why reservoirs remain depleted despite September rainfall

  • Nuclear constraints. How low river levels and high water temperatures forced shutdowns and deratings in France, Hungary and Romania

  • Record solar. Why solar generation hit a new high, and how it lifted the renewable share even as hydro fell

  • Gas prices and storage. Why TTF prices stayed high through the quarter and what low German gas storage means for winter

  • Q4 2026 outlook. The five factors most likely to drive prices this winter, from hydro availability and El Niño to Gulf LNG supply and French nuclear

  • Day-ahead price trends. Quarterly average EPEX day-ahead prices for 12 markets and bidding zones, back to 2019

  • Generation activity overview. Generation by fuel type, share of generation and a year-on-year comparison back to Q3 2021

What you’ll learn

  • Why Europe’s hydropower reserves matter for winter supply, and how far they fell this summer

  • Which countries saw the steepest falls in run-of-river generation

  • Whether a strengthening El Niño could help reservoirs recover, and why its effects remain uncertain

  • How record solar output lifted the renewable share to 53.4%, even as the overall clean-power share fell

  • What low storage and the situation in the Strait of Hormuz mean for European gas and power prices

  • Why Dunkelflaute events could bring sharp price peaks in Q4

Who this is for

  • Traders and analysts tracking the drivers behind European power and gas prices

  • Portfolio and risk managers preparing for a volatile winter

  • Power producers, including hydro operators, assessing how weather and fuel prices affect output and revenue

  • Procurement and corporate energy teams planning purchases and budgets

FAQ

  • Hydropower generation totalled 84.8 TWh, the lowest quarterly total in Montel’s dataset, which goes back to 2015. That was 13% below Q3 2025.
  • Prolonged heat and exceptionally low rainfall drained rivers and reservoirs across much of Europe. Run-of-river plants were hit hardest, with output down 71% in Austria.
  • Rainfall returned closer to normal in September, but reservoirs remain depleted. A sustained recovery depends on above-average rain and snow through autumn and winter. A strengthening El Niño could affect European weather, but its regional effects are uncertain.
  • Average day-ahead prices rose to their highest levels since 2022, with most markets averaging above €100/MWh. Italy was the highest at €182.5/MWh.
  • Montel expects a volatile quarter, with very low prices during periods of renewable surplus and sharp peaks when cold weather and weak wind and solar output tighten supply.