The European Commission has presented its Electrification Action Plan, a roadmap aimed at increasing electricity’s share of final energy consumption in the European Union from the current 23% to an indicative target of 46% by 2040.
The target is not yet binding and will be subject to an impact assessment as part of the post-2030 Energy Union package, scheduled for the fourth quarter of 2026.
The Commission believes that accelerating electrification across industry, transport and buildings will reduce Europe’s dependence on imported fossil fuels. Although around 70% of EU electricity already comes from homegrown clean sources, the electrification rate has remained stagnant at 23% for a decade.
According to the Commission’s estimates, implementing the plan could reduce gas imports by more than 70% and crude oil imports by more than 40% by 2040. This could save the EU up to €260 billion annually on fossil fuel imports and lower electricity generation costs by around 20%.
Storage capacity to rise from 55 GW to 200 GW
Energy storage occupies a central role in the strategy. Brussels estimates that the European Union will need 200 GW of installed storage capacity by 2030 and 500 GW by 2040, compared with approximately 55 GW in 2026.
The target covers household and utility-scale batteries, long-duration and thermal energy storage, and pumped hydropower. Commitments already made by governments, manufacturers, developers and financial institutions envisage the addition of between 30 GW and 35 GW of stationary storage capacity over the 2026-2028 period.
The Commission will also assess the EU’s long-duration flexibility requirements for 2030, 2040 and 2050, with particular attention to energy-intensive industries, data centres, islands, remote areas and grid-constrained regions.
It will also propose new and revised network codes to facilitate the integration of battery and thermal storage, geothermal energy, electric vehicles and heat pumps. A legislative proposal accompanying the plan would adapt network charges to encourage flexible consumption, improve the use of existing infrastructure and accelerate smart meter deployment.
Vehicle-to-grid requirements
The plan introduces several measures to develop smart and bidirectional electric vehicle charging. The Commission will launch a framework for regulatory sandboxes and living labs to enable new vehicle-to-grid business models.
It will also assess and promote the introduction of smart charging by default in electricity supply contracts linked to electric vehicles by mid-2027.
By the end of 2027, Brussels intends to introduce V2G requirements for new electric vehicles placed on the EU market from 2030. These will include technical conditions and standardised communication protocols allowing vehicles to feed electricity back into the grid.
The Commission estimates that smart charging and V2G services could deliver more than €44 billion in annual savings for battery electric vehicle owners by 2040, alongside benefits for the power system through lower investment requirements.
Narrowing the price gap between electricity and gas
One of the main barriers identified by the Commission is the relative cost of electricity. On average, electricity costs almost three times more than gas for EU companies and two and a half times more for households.
The Commission is encouraging Member States to reduce national electricity-to-gas price ratios by 2030 to a maximum of 2.5 for households and 2 for industry. Proposed measures include revising network charges, reducing certain electricity taxes and levies, and progressively phasing out fossil fuel subsidies.
The legislative proposal on electricity bills would allow Member States to lower network charges for certain consumer groups and reduce taxes for energy-intensive companies. It also seeks to ensure that electricity is not taxed more heavily than gas.
Support for electric vehicles, solar PV and heat pumps
Brussels proposes using social leasing schemes to make electric vehicles, heat pumps, photovoltaic installations, solar thermal systems and batteries more accessible to low- and middle-income households.
Member States could use subsidies, low- or zero-interest loans and on-bill financing. The document recommends providing greater support to lower-income households and setting monthly payments at a level that, combined with running costs, remains below expenditure on the fossil fuel technology being replaced.
The Commission estimates that driving a battery electric vehicle can deliver savings of up to 78% compared with an equivalent fossil-fuelled car. Replacing a gas boiler with a heat pump could cut the average EU household’s heating bill by up to 60%.
The electrification agenda could support the deployment of approximately 120 million battery electric vehicles and 100 million heat pumps, compared with around eight million electric cars and 28 million heat pumps currently in use across the EU.
EIB plans more than €75 billion in financing
The European Investment Bank Group intends to provide more than €75 billion over the next three years to support the electrification of industry, buildings and transport, as well as investment in grids, storage, flexibility and power generation capacity.
The Electrification Action Plan forms part of a broader package presented by the Commission. It also includes a legislative proposal to foster the electrification and digitalisation of the energy system and a review of the EU Emissions Trading System.
Under the ETS review, Brussels proposes turning the carbon market into an additional investment vehicle for industrial decarbonisation, including €100 billion in funding for the Industrial Decarisation Bank.