Goldman Puts a €1 Billion Annual Number on Europe's Industrial Power Cost Gap
Goldman's plant-by-plant analysis finds European car and chemical plants carrying up to €1 billion in annual excess power costs versus US competitors.
Goldman Sachs ran a plant-by-plant analysis and found that a large European car factory can carry €500 million a year in excess power costs relative to a US competitor, with a chemical plant facing a gap nearer to €1 billion, OilPrice.com reported on Friday (2026-09-11).5
The numbers land in a market offering little respite. ICE Endex TTF front-month gas was priced at €79.51/MWh at the September 12 close, and German baseload power also closed September 12 at €163.08/MWh. Italy makes the exposure concrete: gas-fired plants set the marginal price in 89% of Italian power market hours so far in 2026, Ember calculated. For Italian industry, TTF is not an abstraction — it is the price of electricity across nearly every hour of the trading day.1
Italy has turned to political pressure. The Italian deputy prime minister said on Friday (2026-09-04) that Rome would keep pushing the EU on energy costs and wanted to revamp the bloc's Green Deal to cut greenhouse gas emissions while managing the price burden, Montel reported. The Iran war, which has kept gas and power prices elevated across Europe, was the explicit rationale.4
The Strait of Hormuz disruption has imposed traceable costs. European Commission President Ursula von der Leyen told EU country leaders that the bloc had spent an additional €6 billion on fossil fuel imports since the start of March. "The price we pay for our dependency," she wrote.1
Gas storage leaves limited room to absorb further shocks. Europe entered the summer refill season with reserves at just 28% full after a hard winter, and levels had recovered to only 35-37%, well short of the 50% seasonal norm, according to Equinor executives. The EU's standard target is 80-90% capacity before winter. Dutch reserves fell to 5.8% by the end of winter, the lowest in a decade; Germany's stores dropped to around 20% before spring began.2
The scramble for LNG runs into direct competition from Asia. JKM, the Asian LNG spot benchmark, last closed at $24.88/MMBtu, a price that is pulling cargoes eastward that might otherwise head to European regasification terminals. Euronews reported in August that Europe was already racing against time to refill before heating season, with Hormuz-linked volatility complicating supply forecasts.3
The Spain-Italy divide is the clearest illustration of where different power-sector choices eventually land. Spain has diversified generation away from gas, reducing the share of hours in which gas-fired plants set the marginal electricity price. Italy has not. With TTF at €79.51/MWh, the 89% figure from Ember means Italian industrial consumers absorb near-full gas pricing across the bulk of each trading day, precisely the mechanism feeding Goldman's competitiveness figures.1,5
Germany's path toward a different structure runs into physical limits. Its offshore wind territory spans just 41,000 square kilometres, roughly 5% the size of Britain's equivalent zone, and Germany plans to fit 70GW of turbines into that space by 2045. At that density, the turbines would slow wind speeds enough to reduce the electricity harvest by 37%, the Economist reported. Germany is pressing toward a constraint it cannot resolve through policy alone.1
The macroeconomic read reinforces the pressure. EU inflation fell from 11% in 2022 to around 2% in most member states. Oxford Economics estimated a prolonged war could push it back to 4% or above. European basic chemicals already saw energy costs take up 42% of value added in 2023, up from 28% two years earlier, while a price index for Chinese chemicals fell 36% over the same period.1
The OilPrice.com analysis published Friday (2026-09-11) argues that Europe has largely completed its energy transition build-out and is now in an operational phase. Running existing assets more efficiently rather than adding new ones shows up in the accounts as lower demand rather than visible capital investment. The argument has merit at the system level. But a chemical plant carrying €1 billion in annual excess power costs against a US rival cannot wait for the operational phase to compound. With European gas storage at 35-37% on the approach to winter, ICE Endex TTF front-month gas faces more upward pressure than seasonal relief.5,2