Europe’s capital markets are often seen as structurally challenged, but low-cost electricity could transform the region’s economic competitiveness. A mix of necessity, opportunity, and urgency is driving this shift.
As economic power consolidates around the US, China, and the EU, energy security has become a key vulnerability - especially for China and Europe. Electrification is accelerating, with global demand expected to outpace GDP growth until at least 2030. Climate change, digitalization and geopolitical pressures add urgency, although Europe’s strong renewables base - already nearly half of its electricity mix - offers an advantage.
Other Renewables*, 0.3%
Source: European Electricity Review 2025. EMBER. January 23, 2025. Unlabelled section is ‘other renewables’ at 0.3% and includes geothermal, tidal and wave generation. * Other fossil fuels include generation from oil and petroleum products, as well as manufactured gases and waste.
A resilient, low-cost power grid could boost productivity, but achieving this by 2030 depends on political alignment, infrastructure investment, and interconnectivity. Delays in the next three years could significantly slow progress. Some nations, like the Netherlands, Denmark, Spain, and Germany, are leading, while others, such as Italy and Poland, face structural hurdles.
The future energy market will likely centre on three pillars: low-cost renewables, long-term gas contracts, and a flexible spot market. Success could secure not just energy stability but a lasting economic edge.
Europe’s energy security is just one of many critical issues shaping the investment landscape. At Franklin Templeton, we analyse these global shifts to help investors mitigate risks and capitalise on emerging opportunities.
One of the biggest forces at play today is the surge in energy demand - driven by AI’s rapid expansion. Powering this growth will require significant investment in infrastructure and a stable, low-cost energy supply. The challenge is not just meeting demand but doing so sustainably.
As AI transforms industries and electrification accelerates, energy security is becoming an increasingly critical factor in economic competitiveness. Understanding these trends across technology, infrastructure, and energy can help investors position for the future.
Investment Strategist,
Franklin Templeton Institute
Analyst
Franklin Templeton Institute
Explore three strategies managed by our specialist investment teams which can help investors benefit from growth vital to powering our future, while contributing to a cleaner and more resilient world.
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