Electrification Plan to make Europe first electro-continent

The long-awaited plan is aimed to help deliver the shift towards efficient electrification of the industry, transport and building sectors with the outcomes of boosting competitiveness, strengthening security of supply and lowering energy prices.

Very much a response both to a stalled electrification rate in these sectors around 23% and to recent crises, most recently that in the Middle East, which has resulted in more than €50 million in additional fossil fuel import costs, the plan implies the cutting of gas imports by more than 70% and of crude oil imports by 40%, with a lowering of the EU’s fossil fuel import bill by €260 million per year by 2040.

Stated achievements for 2030 are to ensure that electricity prices stay less than 2.5x gas prices for households and less than 2x gas prices for industry and that there are 400,000 zero emission trucks on the region’s roads.

It also is intended that the annual heat pump installation rate increases from around 2.4 million in 2025 up to 4 million in 2030.

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Dan Jørgensen, Commissioner for Energy and Housing, says that with the plan, Europe is being put on a course to become the world’s first electro-continent.

“The message we are sending today is very clear: choose electricity over fossil fuels. Choose green, home-grown, cheaper electrons over black, imported, expensive molecules. Choose independence over vulnerability.

“An accelerated clean energy transition coupled with electrification is the answer to Europe’s challenges in terms of security, competitiveness and decarbonisation.”

Reducing prices

A key feature of the electrification plan is to reduce the price gap between electricity and fossil energy costs, including a reduction in electricity system costs through network charges, flexibility and storage.

Proposals include a progressive phase out of fossil fuel subsidies as part of the post-2030 Energy Union package, empowering member states to reduce network charges for certain consumer groups and taxes for energy intensive businesses and addressing the tax differential between electricity and gas.

In order to lower the upfront costs for electrification for end use sectors, member states are encouraged to make use of the options already laid down in the VAT directive by applying lower VAT rates to electrification technologies such as heat pumps, solar panels and residential batteries, and to offer reduced registration taxes for EVs.

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Speeding up electrification also demands significantly enhancing grids productivity and overcoming difficulties in connections and grid access. The plan calls on member states to boost investments in grids and streamline permitting in the acceleration areas created by EU legislation.

System operators are encouraged to involve in their network planning and grid capacity expansion processes the key actors in electrification investments, including industrial sites and parks, data centres, district heating operators, charging point operators, airports and ports.

Member states should also help improving the interface between the electricity grids and users with expansion of the transport recharging infrastructure.

Other aspects of the plan focus on accelerating innovation in electrification solutions, advancing skills and manufacturing, and support for accelerating clean electrification globally.

Industry responses

Industry responses are emerging and we present the initial ones (with others to be added as they land).

In a statement SupergridEurope has welcomed the 2040 electrification target but says that it must not come at the expense of the renewables and efficiency goals.

“The level of European electrification has hardly increased in the past quarter of a century. Requiring member states to terminate decades old habits of taxing electricity higher than fossil gas, combined with sensible new  measures on network charges, more grid enhancing technologies and steering in the form of an electrification target, would finally start moving the dial on electrification,” said SupergridEurope Executive Director, Christian Kjaer.

Energy Storage Europe highlights the recognition of energy storage as a key enabler of electrification and calls for sector specific roadmaps.

“Energy Storage Europe encourages the Commission to complement them with a European energy storage deployment roadmap, bringing together the targeted regulatory, market and investment actions needed to accelerate storage deployment in line with Europe's electrification ambitions.”

The European Suppliers of Waste to Energy Technology (ESWET) says the plan is a clear acknowledgement that Europe’s path to energy independence does not run through electricity alone.

Drawing attention to the regulatory disparity in the supply of waste heat to district heating networks and industrial users, Patrick Clerens, ESWET Secretary General, said: “We welcome the Commission’s renewed emphasis on waste heat, but the current definitions work against leveraging its full potential. A waste-to-energy plant supplying heat to a factory next door is delivering the same benefit as one connected to a district heating network. The regulatory framework should reflect that.”