In 2021, an unprecedented increase in gas spot prices and wholesale electricity prices took place in Europe. Gas spot prices reached a record high day-ahead value of 116.1 EUR/MWh in October 2021. Similarly, the electricity day-ahead prices reached 170 EUR/MWh in October 2021, an increase of 345% compared to October 2020.This study carries out an analysis on the operation of the European power system in 2021, and with alternative counterfactual settings in order to gain insight into causes and effects of the electricity price spike. The electricity market conditions are analysed using the METIS power system model with particular respect to the impact of weather, renewable capacity additions, and fuel prices. The impact of climatic condition is assessed comparing the modelled 2021 year with a set of climatically-adjusted years, reflecting weather conditions observed in the past 37 years. Furthermore, with the help of counterfactual scenarios, we assess the price mitigation effect of the added renewable capacity fleets within the next three years, and the possible CO2 emission increase in a year without the gas and CO2 price spike of the second half of 2021.Due to the fact that the bulk of this analysis was carried out in the course of October the analysis of the last three months of the year is based on future market commodity prices, and synthetic rather than actual power system parameters (demand, availabilities etc).