Europe's energy bill: what the price of power is doing to industry

Monitoring Analytics, the official market monitor for the PJM Interconnection, published its Q1 2026 state of the market report on Thursday. The headline number: the total cost per megawatt-hour of wholesale power in PJM went from $77.78 in the first three months of 2025 to $136.53 in the same period this year. That is an increase of 75.5 percent.

The cause, according to the report, is datacenters.

PJM serves all or parts of 13 states plus the District of Columbia, including Northern Virginia, which the report describes as the densest cluster of datacenters in the world. Monitoring Analytics did not hedge: "Data center load growth is the primary reason for recent and expected capacity market conditions, including total forecast load growth, the tight supply and demand balance, and high prices," it wrote. It added a line that matters more than the percentage: "The price impacts on customers have been very large and are not reversible."

PJM told The Register it is aware of the impact on customers and is working with states and member companies on market caps, transmission expansion and wholesale market reform. Monitoring Analytics did not respond to questions. The exchange is familiar to anyone who has watched a grid operator try to absorb a new class of load without redesigning the market that allocates it.

What this has to do with a toy factory in Bavaria

Nothing directly, and everything structurally. Europe's version of the same problem is older and more diffuse, and it ends in plant closures rather than auction reform.

On 24 June, Brussels Signal reported that Playmobil had ended all figure production in Germany, closing its Dietenhofen plant in Bavaria. Around 350 jobs are affected. The final shift ended that week, with remaining employees on paid leave ahead of an official shutdown at the end of June. The Horst Brandstätter Group, which owns the brand, confirmed production is being consolidated at existing facilities in Malta and the Czech Republic. The company cited sharply rising production costs in Germany and explicitly named high energy prices, alongside elevated wages and ancillary labour costs.

Unions called the move a "catastrophe" for the region. Business groups filed it under a now-familiar heading: the mid-sized German manufacturer that relocates. Administrative and logistical functions stay in Germany. The plastic figures do not.

The Playmobil case is small in employment terms and large in signal. Plastic injection moulding is energy-intensive, labour-intensive and hard to automate away. When the cost of power in one country is high enough and stable enough to outweigh the cost of moving tooling, supply chains and institutional knowledge, the calculation has already been settled for a decade.

The company cited sharply rising production costs in Germany, explicitly naming high energy prices alongside elevated wages and ancillary labour costs.

Households, not just factories

Germany's household electricity prices remain among the highest in the world, currently the fifth most expensive globally and the second highest among major industrial nations, according to Brussels Signal. Energy-intensive processes have been particularly exposed since the 2022 energy crisis, despite partial government relief schemes. The outlet frames the closure inside a broader warning from German industry about structural competitiveness: high energy costs driven by a rapid shift away from nuclear and coal without sufficient baseload alternatives, combined with bureaucracy and wage pressure, which some economists describe as creeping deindustrialisation.

That framing is contested, and the dossier does not settle it. What the dossier does show is that the pressure is not confined to one country or one sector.

On 4 May, pv magazine reported that residential heat pump sales rose 17 percent year on year across 11 European countries in the first quarter of 2026, with France, Germany and Poland averaging 25 percent growth after a sharp jump in gas and oil prices following Iran's closure of the Strait of Hormuz on 2 March. Around 575,000 residential units were sold from January to March, up from 494,000 a year earlier, according to the European Heat Pump Association. Austria was the outlier: sales fell 30 percent because government subsidies were absent.

Paul Kenny, director general of the EHPA, put the consumer logic bluntly: "If your streaming service doubled its price then blocked its movies you'd find a better one." He said the European Commission has outlined VAT and tax reductions and social leasing schemes for lower-income households in its energy crisis plan, and called on EU governments to implement them quickly.

The price signal is doing the work

Read these two stories together and a pattern emerges that is more useful than either alone. When energy gets expensive, demand does not simply fall. It reorganises. A household replaces a gas boiler. A toymaker moves injection moulding to Malta. A grid operator in the eastern United States discovers that its capacity market was not designed for a customer that can add a gigawatt of load and then ask for more.

Monitoring Analytics has a recommendation for that last case, and it is not subtle. Datacenters, the watchdog argues, should be required to bring their own power, with fast-track interconnection for those that do and a queue for those that do not, connecting only when adequate capacity exists. The group warns that the currently proposed one-time backstop auction would "generally shift significant risk to other PJM customers." Its language is unusually direct for a market monitor: "Other PJM customers, whether residential, commercial or industrial, should not be treated as a free source of insurance, or collateral, or financing for data centers."

The politics around this are moving. A Gallup survey cited by The Register found 71 percent of respondents opposed datacenter projects in their neighbourhoods, and projects in multiple states have been abandoned after local pushback.

None of this tells a European manufacturer what its power contract will cost next winter. But it does explain why the same sentence keeps appearing in earnings calls and closure notices across two continents: the energy price is no longer a cost to be managed. It is a decision about where the work happens.