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European Energy Markets Face Rising Debt, Negative Prices, China Competition, RBC Says

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European energy markets face mounting affordability, negative-price and geopolitical challenges, while Veolia won a 148 million-euro ($172.7 million) French waste-to-energy contract, RBC Capital Markets said in a Tuesday note.

A consortium led by Veolia, Eiffage and the architectural firm Hobo won the design-build contract for an energy recovery facility in Limoges, France.

The facility will process 95,000 metric tons of waste annually and generate 45 gigawatt-hours of electricity, with construction expected to start in early 2027 and commissioning set for 2029.

Veolia has not disclosed its share of the contract, although RBC expects it to receive most of the award after Eiffage secured a 34 million euro portion.

UK households could owe energy suppliers as much as 7 billion British pounds ($9.54 billion) by year-end as higher winter gas and electricity prices put further pressure on household affordability, the note added, citing Energy UK.

Middle East tensions continued to push up gas prices, while domestic energy debt and arrears rose by about 500 million British pounds over the year to a record 6 billion British pounds at the end of June.

Energy debt unpaid for more than 30 days could reach 7 billion British pounds by year-end, while the government's price cap may rise to a three-year high, RBC said.

The higher cap could more than offset the impact of the government's planned October reduction in value-added tax on household electricity bills, keeping bad debt in focus.

European power markets are seeing more negative-price hours as strong solar generation meets moderate demand, while wind output and limited grid flexibility add to the pressure.

Across the UK, Italy, Germany, Spain and France, negative-price hours in H1 2026 stood about 2% above the record levels recorded in H1 2025.

Europe recorded more than 13 times as many negative-price hours in 2025 as in 2022, with solar-heavy markets such as Spain and Germany facing the strongest increase.

Potential market saturation due to overbuilt battery energy storage capacity remains a risk, although RBC Capital Markets continues to view solar-dominated grids as attractive markets for battery deployment.

Ming Yang, China's third-largest wind turbine manufacturer, continues to target Europe despite political barriers, including the UK's rejection of its planned 1.5 billion British pound Scottish factory.

Ming Yang supplied 446 megawatts to Europe last year, less than 3% of total additions, while the European Union investigates subsidies and considers restrictions on Chinese-made turbines.

The company has partnered with Octopus Energy to explore UK onshore turbines, but RBC said security concerns around critical infrastructure remain a major hurdle despite potential cost benefits.

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