Discussing energy in the best company in J&T Banka Café Electra
Together with my dear colleagues Michal Semotan and Michal Šnobr we had at the end of 2025 a great evening discussion on current energy challenges and what might be the best investment opportunities in the energy sector for capital appreciation. Here are some of my remarks to the questions raised.
Key Takeaways: The Energy Sector at a Crossroads
The energy market is currently navigating an exceptionally turbulent period shaped by global instability, political uncertainty, and profound structural change. Long-standing rules of fair global trade are eroding, state involvement in energy markets is increasing, and there is growing uncertainty about whether previously agreed decarbonisation targets will remain unchanged, be revised, or partially abandoned. At the same time, it is still unclear how future electricity demand will evolve, particularly in light of the uncertain outlook for European industry.
Despite this uncertainty, massive investments are unavoidable. Energy systems require large-scale capital to modernise infrastructure, renew generation assets, and decarbonise industry and transport. Trading itself is also transforming: markets are moving closer to real-time operation and increasingly integrating balancing and ancillary services, which will significantly reshape revenue potential across Europe. One positive signal is the expected stabilisation of gas markets from next year, supported by new export terminals and the gradual opening of additional gas fields.
Regulation, Markets, and the Growing Role of the State
A central question is whether Europe still operates a truly free energy market. In electricity markets especially, regulation and political intervention have increasingly replaced market-based risk-taking. Business risks are often shifted to the state, while governments must provide incentives to ensure new capacity is built. Public demand—both from households and parts of industry—for stronger state involvement remains high, driven by concerns over energy security and competitive pricing.
Given recent shocks such as the pandemic, the energy crisis, and rising geopolitical tensions, Europe is likely to face at least another decade of growing state influence rather than a return to fully liberalised markets.
What Governments Must Do to Attract Investment
To attract private capital, governments must above all be predictable, consistent, and non-populist. They need a clear understanding of which roles should belong to the state and which should be left to the market, and they must base decisions on robust data rather than short-term political pressure. In certain areas—particularly those linked to security or lower capital costs—the state may need to take a direct role in energy development.
Rethinking Energy Sovereignty in the 21st Century
True energy sovereignty during the energy transition is impossible without deep international interdependence. Instead, modern sovereignty means ensuring adequate generation capacity, resilient and robust grids, and the political ability to decide which technologies to support.
This requires strong, independent governmental expertise, a high-quality and autonomous regulator, and greater flexibility in providing state support—something currently constrained by European state-aid rules and sustainable finance taxonomy. Energy and climate policy should not be an end in itself, but a tool to deliver broader economic strength and national security. Ultimately, Europe’s competitiveness will depend less on markets alone and more on the capabilities of governments, regulators, and public institutions.
Investment Perspectives by Energy Source
Nuclear power cannot realistically be financed purely through private capital due to high risk premiums and capital costs. Moreover, nuclear energy is closely linked to geopolitics, national security, and industrial strategy—areas that typically fall outside the primary interests of private investors.
Renewable energy offers opportunities, but with limitations. In smaller countries like the Czech Republic, suitable land is scarce and often controlled by large players, limiting economies of scale and increasing unit costs. Successful investment strategies therefore require diversified portfolios combining multiple technologies and reliable backup solutions to address periods of low renewable output. Interest in long-term power purchase agreements (PPAs) is growing, but stronger state support and better communication of their benefits are still needed.
Reasons for Optimism—and for Concern
What inspires optimism is renewed political decisiveness. After decades of delay, key decisions on capacity mechanisms and nuclear energy are finally being made, signalling a willingness to act rather than endlessly debate.
What raises concern, however, is the fragmentation of European unity. Subsidy races within the EU—such as industrial electricity price support schemes in larger economies—risk undermining fair competition and pose challenges that smaller economies may struggle to withstand.
More info from discussion can be found in this article.
Or you can even watch a short video:
