Severe space weather can disrupt power grids through geomagnetically induced currents (GICs), leading to equipment stress, voltage instability, and power outages. The resulting economic impacts arise primarily from interruptions to production, supply chain disruptions, and market responses, rather than from direct infrastructure damage. This review examines the physical processes linking solar activity to power system disruptions and how their economic consequences have been assessed. We compare major modeling approaches, with emphasis on their assumptions, appropriate use cases, and limitations, including value of lost load (VoLL) for short-term outage costs, input–output (I–O, DIIM, MRIO) frameworks for indirect effects, and computable general equilibrium (CGE) models for long-term structural adjustments and policy analysis. Across these approaches, most studies represent space weather impacts through power outages as the primary entry point, translating physical disturbances into economic shocks that propagate across sectors. Existing evidence shows that indirect losses dominate total economic impacts, reflecting the strong interdependence of modern production systems. Recent advances further highlight the importance of restoration speed, backup measures, and resilience investments in shaping overall losses. Improvements in forecasting, operational strategies, and infrastructure protection can substantially reduce economic impacts, while policy frameworks increasingly emphasize coordinated response and preparedness. However, significant uncertainties remain, particularly in transformer vulnerability, restoration processes, and the cross-border propagation of disruptions. Reducing these uncertainties requires more standardized datasets and tighter integration between physical and economic modeling frameworks. Strengthening this linkage is essential for improving the robustness of risk assessments for extreme space weather events.