JPMorgan cautious on European Utilities: Power-demand recovery a ’gradual process’

Investing.com -- JPMorgan is adopting a more cautious stance on European utilities heading into 2026, warning that investors may need to temper expectations for near-term power-demand growth despite a long-term rebound taking shape.

In its European Utilities 2026 Outlook, analyst Javier Garrido said the bank still expects “a dramatic swing in European power demand growth,” forecasting a shift from a roughly 9% decline between 2010 and 2023 to a 1.4% compound annual growth rate through 2030.

But the firm stressed that electrification across transport, heating and industry will be “a gradual process, back-end loaded into the end of this decade,” with below-average growth expected in 2026.

JPMorgan noted that commodities, “chiefly natural gas,” remain a headwind for power prices. After an estimated 12% sector outperformance in 2025, the bank said its “top down view warrants a cautious approach towards European utilities” next year.

The analyst also urged restraint on the outlook for data centers and green hydrogen. While these segments will be “powerful drivers,” contributing 152 terawatt-hours of demand growth from 2023 to 2030, JPMorgan said this “may fall short of bullish expectations” due to permitting, grid-connection delays and a slower ramp in Europe compared with the United States.

Still, the bank highlighted RWE and SSE as its top picks, saying both offer “above-average earnings growth to 2030.” It advised avoiding Fortum, Severn Trent, Terna and Orsted, citing premium valuations and heightened execution risk.

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