European GO Prices Stay at Tenth of 2022 Peak as Solar Outweighs Drought
Strong solar generation and weak certificate demand are keeping European guarantee of origin prices depressed despite hydropower losses comparable to the 2022 crisis.
European guarantee of origin prices are holding at roughly a tenth of their 2022 record peak, Montel reported on Monday (2026-09-07), with market participants citing strong green output and soft demand as the factors keeping certificate prices depressed even as this summer's drought rivals the severity of four years ago.8
In 2022, drought combined with weak hydropower and war-related uncertainty drove GO prices to record levels as supply from hydro-heavy generators shrank. This time those supply pressures have returned, but solar generation is running well above its seasonal average and demand for certificates has softened materially.8
Europe's solar panels produced 17% more power during this summer's heat waves than their seasonal average, Ember data showed, cushioning the grid against afternoon demand surges. Extreme temperatures in late June pushed Italy's power demand up 28% compared to the preceding week, Ember found; France registered a 14% increase over the same period. Solar absorbed much of that incremental load, generating certificates in volume that hydro deficits have not erased. For GO markets, the net effect is an oversupplied certificate ledger even as hydro generation underperforms.4,8
France did shed nuclear capacity alongside the hydro losses. The country lost 18% of its nuclear output to "environmental factors" in mid-July, Ember reported, extending a pattern of summer outages that has repeatedly weighed on French generation reliability. But nuclear plants do not issue GOs — the lost output created a power-price support rather than a certificate supply problem.4
Hydropower stress is real in the southeast. Nuclear availability in the region edged higher after heatwave-driven restrictions began to loosen, but depleted water resources could keep the power system under pressure through October, a Montel EQ analyst said on Monday (2026-08-10). The Electricity Coordination Group, also meeting on Monday (2026-08-10), assessed that the EU faces no near-term electricity shortage while flagging conditions as likely to remain tight.2,3
GO prices had briefly recovered earlier in the year. The Cal 26 contract rose above EUR 2/MWh in the brokered market on Tuesday (2026-05-19), hitting its highest level since January 2024, traders and analysts said at the time, with Cal 27 and Cal 28 seeing similar moves on concerns over a looming hydrological deficit. That recovery has since unwound entirely.1,8
The softer demand picture extends beyond GOs. A lobby group forecast on Wednesday (2026-08-26) that global gas demand is on course for its first annual decline since 2022, pointing to the same industrial softness limiting appetite for green energy certificates. European gas prices remain elevated amid Hormuz-linked supply disruptions, Euronews reported on August 20 (2026-08-20), with ICE Endex TTF front-month trading at €75.83/MWh on September 8. European LNG prices are running roughly 60% above pre-war levels, according to Irina Slav writing on her Substack on August 31 (2026-08-31). High gas costs have not translated into GO demand the way they did in 2022, suggesting the buyer base for certificates has contracted.5,67
Near-term, southeastern reservoir levels remain well below normal and certificate demand shows no recovery. Only 23% of European households currently have access to or use air conditioning, Canary Media reported, leaving significant latent cooling demand as temperatures continue rising. If solar output reverts toward seasonal norms as autumn approaches and hydro refills prove slow, GO prices could move off their current lows, though any recovery would still need demand-side participation that has been absent all summer.4,2