Energy models have an unusual talent. However chaotic the present may be, the future almost always becomes remarkably calm. Wars end. Shipping lanes reopen. LNG terminals work as planned. Winters remain manageable. Producers deliver. Markets rebalance. And natural gas prices gradually return to a smooth, comfortable line.
Perhaps they will. But Europe has now spent five years discovering how little it actually knows about future gas prices.
The latest Dutch Climate and Energy Outlook illustrates the problem. The KEV 2026 uses a central wholesale gas-price path that settles at roughly €0.20–€0.25 per cubic metre through much of the 2030s. In late September 2026, Dutch TTF gas was trading at approximately €72 per megawatt-hour, equivalent to around €0.70 per cubic metre—roughly three times the model’s long-term central assumption.
That does not prove the model will be wrong in 2030. Prices could fall sharply if LNG supply expands, demand weakens and geopolitical tensions ease. It proves something more important: nobody knows.
A Model Assumption Is Not a Price Prediction
Energy models need a gas price. Without one, they cannot calculate household bills, industrial competitiveness, power prices or the apparent cost of decarbonisation. Analysts therefore select a central pathway and add a range around it.
That is legitimate modelling. The mistake begins when policymakers treat that pathway as the most likely future and compare investments against it as though the uncertainty were minor.
Gas is not merely another input with a predictable inflation curve. Its European price depends on weather, storage levels, Asian demand, LNG export capacity, pipeline failures, sanctions, wars, shipping routes, currency movements and the behaviour of a relatively small number of suppliers. Related: U.S. Oil, Gas Drilling Perks Up As Pressure Mounts
In 2022, Russian supply cuts pushed TTF prices above €300/MWh. By early 2026, expanding global LNG supply appeared likely to ease the market. The International Energy Agency expected strong LNG growth to improve security and affordability, while still warning that weather and geopolitics could cause renewed volatility.
Then the Middle East crisis disrupted LNG flows through the Strait of Hormuz. By September, benchmark European gas was again trading above €70/MWh and more than double its level a year earlier.
None of this means forecasters are incompetent. It means they are being asked to predict variables that are fundamentally political, meteorological and strategic. The honest output is therefore not one line. It is a wide fan of possible outcomes.
Cheap-Gas Assumptions Quietly Decide Policy
The gas-price assumption matters because it changes which investment appears sensible.
Assume gas returns permanently to €20–€25/MWh and a gas boiler, gas turbine or industrial furnace can look reassuringly cheap. A heat pump, battery, thermal store or renewable-power contract must then justify its capital cost against an abundant low-cost fuel.
Assume gas remains at €60–€80/MWh—or periodically spikes far above it—and the same investment decision reverses. Efficiency becomes more valuable. Electrification pays back faster. Renewable generation avoids more imported fuel. Storage earns more from shifting low-cost electricity into expensive hours.
The problem is not that official models contain a low-price scenario. They should. The problem is allowing that scenario to become the invisible default behind infrastructure expected to operate for 20 or 30 years.
Gas volatility does not remain confined to the gas market. It enters household heating bills, industrial costs, inflation and public budgets. It also reaches electricity consumers because gas-fired power plants frequently set the marginal wholesale price.
The European Environment Agency calculated that gas-price volatility added approximately €13 billion to the EU’s wholesale electricity bill during the first 16 weeks of 2026 alone. Renewable capacity installed since 2010 saved an estimated €29 billion over the same period compared with a system in which renewable deployment had stalled. That is the real cost of forecast error.
Renewables Are a Hedge, Not a Forecast
Renewable energy does not require governments to know what gas will cost in 2035. Solar and wind have uncertainties of their own: capital costs, interest rates, permitting, grid connections, weather variation and curtailment. Batteries degrade, grid expansion is expensive and periods of low wind and solar still require flexible capacity. A power system cannot be built from generation costs alone.
But the risk is structurally different. Most of the cost of a wind farm, solar park, grid cable or battery is known when the investment is made. Once built, wind and solar do not need to purchase fuel every morning at a price determined by a war, a cold spell or competition with Asian importers.
Storage and demand response then reduce the number of hours in which gas plants set the electricity price. Grids and interconnectors spread weather and demand risks across larger regions. Heat pumps turn one unit of electricity into several units of heat, reducing the amount of primary energy households must buy. Efficiency simply removes part of the exposure altogether.
These technologies do not make energy costs perfectly predictable. They convert an open-ended commodity risk into a portfolio of assets with more visible capital and operating costs.
That is valuable even if gas becomes cheap. And it becomes extremely valuable if it does not.
Policy Should Be Built for Being Wrong
Governments should stop asking which single gas-price forecast is correct. They should ask which investments remain sensible across the widest range of gas-price outcomes.
Every major energy-policy calculation should show at least a sustained low-gas case, a central case, a prolonged high-gas case and a shock case. The analysis should include not only average fuel costs but also volatility, inflation, emergency subsidies, security-of-supply spending and the effect of gas on electricity prices.
Projects that depend on permanently cheap gas should then be recognised for what they are: bets on a benign geopolitical future.
Gas will still have a role during the transition, particularly for industrial heat, seasonal balancing and backup during prolonged periods of low renewable output. The point is not to pretend Europe can remove every molecule immediately. It is to avoid building more long-lived demand on the assumption that imported gas will reliably remain cheap.
The Dutch KEV 2026 itself concludes that the Netherlands’ continuing fossil-import dependence leaves it exposed to global market shocks. That warning should carry more weight than the apparent precision of any central price curve.
Europe does not know whether gas will cost €25, €75 or €150/MWh during the next crisis. It does know what sunlight and wind cost. It increasingly knows the capital cost of batteries, grids, insulation and heat pumps. And it knows that none of them can be withheld at a border or rerouted to the highest bidder.
The best response to an unknowable gas price is not a better guess. It is needing less gas.
By Leon Stille for Oilprice.com
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