The European Commission has presented an Electrification Action Plan aimed at increasing electricity’s share of final EU energy consumption from approximately 23% today to 46% by 2040. The strategy is designed to shift industrial heat, transport and buildings away from imported fossil fuels. It also seeks to strengthen demand for renewable generation, networks, storage and flexible power assets.
Brussels says electricity has remained at around 23% of final consumption for a decade. The Commission estimates that approximately 70% of EU electricity already comes from domestic low-carbon sources. It also estimates that faster electrification could reduce annual fossil-fuel import expenditure by approximately €260 billion.
Sectors targeted for faster electrification
The programme focuses on areas where electrification has progressed more slowly. Industrial support would cover electric furnaces, heat pumps, process-electrification equipment and battery systems. Transport measures would back electric vehicles and charging infrastructure.
In buildings, policy would place greater emphasis on heat pumps and electric heating. The plan links these measures to broader growth in renewable generation and related grid and flexibility assets.
Electricity-gas pricing and demand-side measures
A central obstacle highlighted in the plan is the price relationship between electricity and natural gas. Member states would be given greater flexibility to reduce network charges for selected consumers. They could also lower electricity taxes for energy-intensive industries and remove fiscal structures that tax electricity more heavily than gas.
The Commission also points to faster deployment of smart meters to support demand-side management. It says this would enable more dynamic retail pricing through changes in how consumers are billed.
Financing tools for households and industry
The plan includes support via the Social Climate Fund, the proposed Industrial Decarbonisation Bank, social-leasing schemes and a planned Clean Heat Market. These mechanisms are intended to reduce the initial capital burden of electrification.
The Commission highlights that the upfront costs are particularly relevant for households and industrial companies facing high equipment-conversion costs.
Grid constraints and EU Grids Package implementation
Network development is described as the principal physical constraint on electrification. Long grid-connection queues and insufficient capacity are already slowing renewable projects, industrial electrification and battery deployment.
The Commission calls for accelerated implementation of the EU Grids Package. It frames the approach as combining new infrastructure with better use of existing transmission and distribution assets.
Implications for South-East Europe market alignment
For South-East Europe, the strategy expands the commercial case for renewable generation while increasing the cost associated with grid delays. Industrial electrification is expected to raise demand during periods when solar and wind output may be limited.
The plan links this shift to higher value for hydro flexibility, batteries, interconnectors and long-term power purchase agreements. Countries including Serbia, Montenegro, Bosnia and Herzegovina and North Macedonia would face growing pressure to align network planning and industrial electricity documentation with the EU market.
The Commission says exporters selling steel, cement, aluminium, fertilisers and processed minerals into the bloc will increasingly need both a competitive electricity price and evidence that production uses electricity meeting credible emissions and traceability requirements.
