​​Europe’s gas vulnerability strikes again
​Four years ago, the war in Ukraine exposed the fragility of Europe’s gas dependency, triggering one of the largest energy shocks in decades. The war in Iran in early March shows how little has changed: gas prices jumped 77% in a single day[1], proving Europe remains just as exposed to geopolitical energy shocks.
​
Even if the crisis proves short-lived, the market reaction is revealing. In energy systems built around marginal pricing, perceived supply risks translate almost instantly into price volatility. Within hours of the first headlines, European gas prices surged as traders began pricing potential Middle East supply disruptions. The Strait of Hormuz, a corridor through which roughly one fifth of global LNG trade passes, reappeared at the center of market attention.
​
For European industry, this volatility matters. Fossil fuels still supply 80% of industrial heat (1500 TWh/year), meaning geopolitical tensions thousands of kilometers away rapidly become cost pressure on factory floors.
​
Figure 1 - Gas price reaction to geopolitical risks (TTF wholesale prices)[1]
Other major economies are navigating this differently.
​​
-
The United States benefits from abundant domestic gas production. Once a net importer, it became a structural net exporter in 2017 on the back of the shale revolution, leaving the economy relatively insulated from external shocks. When the Strait of Hormuz closed, the Henry Hub benchmark rose by less than 7% on the day.​
-
China, with limited domestic gas resources, has taken a different route: rapidly electrifying large parts of its energy demand. Its electrification rate now sits at 35%, roughly 10 percentage points above Europe or the United States, where electrification has largely stagnated. In 2023 alone, electrification added 73 TWh of new electricity demand, directly replacing fossil fuel consumption[2] - with industry accounting for nearly half of this shift.
​​
​​The good news: gas no longer dictates power prices
​Europe’s power system today looks very different from the one that faced the 2022 energy crisis. Back then, gas supply disruptions coincided with a collapse in electricity production. France lost a large share of its nuclear output, hydro conditions were weak across Europe, and gas plants frequently set the marginal price. When gas prices surged, electricity prices followed.
​​
Figure 2 – Gas influence on power prices varies by EU country[3]
That link is now loosening. Electricity production has recovered, particularly in France as nuclear availability improves. At the same time, renewables have surged: since 2022, solar and wind capacity has grown by around 50%, adding more than 200 GW to the EU system.
​
The result is a more uneven price landscape. When gas prices jumped in early March, electricity prices spiked during morning and evening peaks, when gas plants still set the price. But during solar-heavy midday hours, prices hovered near €0/MWh and sometimes turned negative.
​
Europe has entered a new marginality regime: gas still matters, but it no longer sets power prices everywhere or all the time. As a result, flexibility in when electricity is consumed is emerging as a new hedge against fossil volatility.
​​
​​Thermal energy storage as a hedge: 40% cost reduction since the start of the crisis​​​
Consider a factory in France running a thermal energy storage unit alongside a gas boiler in hybrid mode. Since early March, the thermal energy storage unit would have acted as a buffer against price spikes, charging during low-price hours and delivering heat from storage when prices surged. Rather than absorbing heat costs at 85€/MWh – 50% above pre-crisis levels – the factory would have kept its marginal heat cost at 49€/MWh, effectively shielding the site from the worst of the shock.​
Figure 3 – Thermal Energy Storage schedule on March 4th, 2026[4]
The Iranian crisis may or may not have long-lasting effects on commodity prices. But the reaction of gas markets reminds us of something deeper: Europe’s continued dependence on imported fossil fuels leaves its economy exposed to geopolitical shocks.
​
The continent is not without resources. Europe now has an increasingly abundant supply of low-carbon electricity, and the tools to deploy it more broadly across the economy are maturing fast.
​
Electrifying industrial heat, particularly when combined with flexibility and thermal storage, offers a concrete path from exposure to resilience: one that responds to price shocks in real time rather than absorbing them.
In an increasingly unstable world, that transformation may prove just as important for industrial competitiveness as it is for decarbonization. The two, it turns out, point in the same direction.
​
​
​
​​References
[1] Source: TTF
[2] Source: China Energy Transition Review 2025, Ember
[3] Source: “Latest energy shock reminds Europe of its risky gas reliance” Ember, Montel, GLE, MIBGAS, ENTSO-E. Data until March 10, 2026, except for France (March 16, 2026)
[4] Optimization by Epyr for a 1 MWthermal TES, located in France. Detailed sources & assumptions: cost of gas heat: TTF market; CO2 price: ETS market; gas taxes: 1.52€/MWh; variable gas grid fees: T4 (1.1€/MWh); gas boiler & TES round trip efficiencies: 0.9; cost of power: EPEX sport market; grid fees: TURPE 7 (TSO); power taxes: 0.5€/MWh
​
​​​​​​​​​​​​​​​--
About Epyr
Epyr develops innovative thermal energy storage solutions to help industries transition away from fossil fuels. By making clean industrial high-temperature heat cost-effective and scalable, Epyr aims to accelerate the energy transition and reduce global emissions.​​​