The European Commission has presented an Electrification Action Plan aimed at lifting electricity’s share of final EU energy consumption from approximately 23% today to 46% by 2040. The strategy is designed to move 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.
Electricity’s share has remained around 23% of final consumption for a decade. Brussels estimates that faster electrification could cut annual fossil-fuel import expenditure by approximately €260 billion. The plan is framed around sectors where electrification has advanced more slowly.
Sectors targeted for higher electrification
Support under the programme would cover industrial measures including electric furnaces, heat pumps, process-electrification equipment and battery systems. For transport, the measures would back electric vehicles and charging infrastructure. In buildings, policy would place greater emphasis on heat pumps and electric heating.
A key factor highlighted in the plan is the price relationship between electricity and natural gas. Member states would receive greater flexibility to reduce network charges for selected consumers. The approach also includes lowering electricity taxes for energy-intensive industries and removing fiscal structures that tax electricity more heavily than gas.
Pricing tools and demand-side management
The Commission links faster deployment of smart meters to demand-side management and more dynamic retail pricing. This is intended to help align consumption patterns with system needs as electrification increases. The plan also sets out additional support mechanisms for upfront costs.
Planned funding channels include the Social Climate Fund, the proposed Industrial Decarbonisation Bank, social-leasing schemes and a planned Clean Heat Market. These mechanisms are intended to reduce initial capital burdens of electrification. The focus includes 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 is therefore calling for accelerated implementation of the EU Grids Package.
The EU Grids Package is described as combining new infrastructure with better use of existing transmission and distribution assets. This approach is positioned as relevant to both generation build-out and new electrification demand. It also connects to regional power system planning needs beyond the EU core market.
Implications for South-East Europe and industrial exporters
For South-East Europe, the strategy expands the commercial case for renewable generation while increasing the cost associated with grid delays. Industrial electrification would raise demand during periods when solar and wind output may be limited. That shift is expected to increase the value of hydro flexibility, batteries, interconnectors and long-term power purchase agreements.
Countries including Serbia, Montenegro, Bosnia and Herzegovina and North Macedonia are expected to face growing pressure to align 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 electricity used in production meets credible emissions and traceability requirements .
