Electrify to compete: Europe’s path to affordable, secure and sustainable energy

Electrification is central to Europe’s competitiveness, addressing the energy trilemma of affordability, security and sustainability. Replacing imported fossil fuels with homegrown clean electricity can shield EU industry from volatile costs and boost competitiveness. Yet, electricity makes up just 23 per cent of final energy use, well below climate-neutrality needs. 

Maintaining Europe’s global leadership in energy technologies will be critical to achieving this transition. It requires coordinated procurement and incentive structures that boost our digital competitiveness and resilience, not just in the long term, but now. It also requires a secure, interoperable digital backbone protecting energy grids and enabling AI-driven resilience across Europe’s critical infrastructure more generally.  

Delivering on this vision will require a structural transformation: expanding clean power generation, upgrading grids and making it easier for businesses and households to switch. We recommend the European Commission include the following key elements in its upcoming Electrification Action Plan:

• Set an EU-wide mandatory electrification target of at least 32 per cent as indicated in the Clean Industrial Deal, translated into national and binding sectoral targets and prioritise cost-efficient electrification technologies in EU funds and the Industrial Decarbonisation Bank. 

• Improve the price ratio between electricity and fossil fuels by finalising the Energy Taxation Directive revision,4 and working with Member States to reduce or remove electricity levies and other charges that can be funded through other means, e.g. via emissions trading system (ETS) revenues, public finances or through levies on fossil fuels. 

• Incentivise digitalisation of grids by allowing network operators to recover both operational (OpEx) and capital (CapEx) costs, and adopt forward-looking grid planning and investment that accounts for long-term electrification needs. 

• Set up clear grid connection queues based on clear, objective and measurable criteria, instead of using the slower ‘first-come, first-served’ model across all Member States.  

• Reform existing grid connection frameworks to accelerate the connection of demand by applying objective and transparent ‘readiness’ criteria allowing projects that are ready to connect faster. 

• Clarify the flexibility needs of grid operators by market, provide clear incentives for consumers to participate in flexibility markets on a voluntary basis and recognise the value of storage solutions or grid support services. 

• Enable the deployment of advanced clean energy technologies by streamlining and digitalising permitting and access to finance. ​     ​