The European Commission has presented an Electrification Action Plan intended to raise electricity’s share of final EU energy consumption from approximately 23% today to 46% by 2040. The strategy aims to shift industrial heat, transport and buildings away from imported fossil fuels while strengthening demand for renewable generation, networks, storage and flexible power assets.
Electricity has remained stuck at around 23% of final consumption for a decade, despite approximately 70% of EU electricity already coming from domestic low-carbon sources. Brussels estimates that faster electrification could reduce annual fossil-fuel import expenditure by approximately €260 billion.
The programme focuses on sectors where electrification has progressed slowly. Industrial companies would receive support for electric furnaces, heat pumps, process-electrification equipment and battery systems. Transport measures would support electric vehicles and charging infrastructure, while buildings policy would place greater emphasis on heat pumps and electric heating.
A central obstacle is the price relationship between electricity and natural gas. Member states would be given greater flexibility to reduce network charges for selected consumers, lower electricity taxes for energy-intensive industries and remove fiscal structures that tax electricity more heavily than gas. Faster deployment of smart meters would support demand-side management and more dynamic retail pricing.
The plan also envisages support through 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, particularly for households and industrial companies facing high equipment-conversion costs.
Network development remains the principal physical constraint. Long grid-connection queues and insufficient capacity are already slowing renewable projects, industrial electrification and battery deployment. The Commission is consequently calling for accelerated implementation of the EU Grids Package, combining new infrastructure with better use of existing transmission and distribution assets.
For South-East Europe, the strategy expands the commercial case for renewable generation but also increases the cost of grid delays. Industrial electrification will raise demand during periods when solar and wind output may be limited, increasing the value of hydro flexibility, batteries, interconnectors and long-term power purchase agreements.
Countries such as Serbia, Montenegro, Bosnia and Herzegovina and North Macedonia will face growing pressure to align their network planning and industrial electricity documentation with the EU market. Exporters selling steel, cement, aluminium, fertilisers and processed minerals into the bloc will increasingly need both a competitive electricity price and evidence that the electricity used in production meets credible emissions and traceability requirements.
