With costs jumping by double digits in Europe, people are understandably demanding to know why their bills are soaring with little to show for it.
In response, politicians have offered a range of explanations, from the strain of new refugees and the energy appetite of artificial intelligence to dramatic acts of Russian sabotage.
However, the real reasons for the surge are found in the accumulating consequences of energy decisions made over many decades.
While Germany now has Europe’s most expensive household electricity, Poland has seen its prices jump by 20 percent, the third-fastest rise in the EU. Understanding the structural roots of the problem reveals a more complex picture.
The Blame Game: Plausible but Incomplete
When problems feel overwhelming, simple narratives often take hold. Here are a few popular explanations that, upon closer inspection, fall short of explaining the full situation.
The Rise of AI and Data Centres
It’s a compelling story: our growing reliance on technology is making energy impossibly expensive. Tech companies themselves often point to the boom in data centers.
The energy required for a single ChatGPT query illustrates the new scale of demand, and Goldman Sachs predicts that data centre energy use will surge 160 percent by 2030.
However, the impact of data centres is highly localised. The most dramatic price increases occur near these power-hungry facilities. The widespread price hikes in cities like Warsaw and Berlin, which lack a high concentration of data centers, suggest a different primary cause.
The Shadow of Pipeline Politics
Another common narrative points to the sabotage of the Nord Stream gas pipelines on September 26, 2022. The explosions served as potent political theater, yet they occurred after Russia had already suspended deliveries in the wake of the conflict in Ukraine.
Energy markets had already absorbed the shock of a severed supply line.
In fact, the day after the explosions, Poland opened its own Baltic Pipe, bringing in Norwegian gas and cementing its independence from Russian energy. The physical damage to the pipelines confirmed a geopolitical reality that prices had already accounted for.
Pointing Fingers at Refugees
Perhaps the most sensitive explanation is that the influx of Ukrainian refugees has strained the energy grid. Germany now hosts 1.2 million refugees, while Poland accommodates about one million.
Yet the data complicates this theory.
While prices were rising, the number of Ukrainian refugees in Poland actually decreased by 350,000. The gradual growth in household energy consumption, even with population shifts, adds a fractional demand to the grid that cannot account for such sharp price hikes.
The Real Culprits: A Legacy of Energy Choices
With the common narratives proving insufficient, the real causes come into focus. They are foundational and far more mundane, rooted in long-term policy and the fundamental costs of generating power.
The Hidden Costs of Coal
A major part of the story, especially for Poland, lies buried in the ground. As Europe’s most coal-dependent economy, Poland generates nearly 57 percent of its electricity from coal.
This creates a double financial burden: the high cost of extracting the coal and the heavy charges incurred for its emissions through the EU’s carbon Trading System.
These costs are passed directly to consumers through taxes, which make up over 40 percent of an electricity bill in Poland, the second-highest share in the EU.
The Necessary, but Costly, Shift to Green Energy
While Germany moved away from coal more quickly than Poland, both countries are now facing the bill for the energy transition. Across the EU, coal power dropped by 26 percent in 2023, reflecting the upfront financial realities of this essential climate progress.
Modernising the grid, building wind farms, and installing solar panels all require billions in investment. These expenses show up as taxes and levies on monthly bills, which on average made up nearly 28 percent of EU electricity prices in early 2025.
Poland is making progress, generating a record 29 percent of its electricity from renewables in 2024. But as the only EU country without a set date to phase out coal, it is paying for its past reliance and its future transition at the same time.
Paying the Price for Past Decisions
While bills are soaring in Germany and Poland, the EU average price has remained largely stable. Some countries, like Slovenia and Finland, have even managed to lower their prices, proving that different policy choices lead to different results.
Blaming refugees, AI, or foreign sabotage offers a simpler narrative than explaining the long-term costs of grid modernization and carbon pricing.
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