COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Action Plan for Affordable Energy Unlocking the true value of our Energy Union to secure affordable, efficient and clean energy for all Europeans
Date: 2025-02-26
Institutions: Directorate-General for Energy, European Commission
Subjects: EU energy policy, action programme, consumer protection, electrical energy, energy poverty, energy supply, energy transition, price of energy, reduction of gas emissions, renewable energy

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 26.2.2025  COM(2025) 79 final  COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Action Plan for Affordable Energy      Unlocking the true value of our Energy Union to secure affordable, efficient and clean energy for all Europeans  
 
 
1.  INTRODUCTION  

Our energy market  fuels our economy, supports our society and connects our communities. 
Together, we have built resilient grids, decoupled our economic growth from our greenhouse 
gas  emissions,  reduced  our  dependencies  and  shown  leadership  in  the  global  energy 
transition. The EU managed the recent energy crisis thanks to the rapid deployment of clean 
energy, the diversification of supply, the availability of energy interconnections critical to its 
security and the solidarity demonstrated across Member States.  

However, there is a clear and urgent need to strengthen our Energy Union. High energy 
costs are hurting our citizens: energy poverty affects more than 46 million Europeans, with a 
disproportionate  impact  on  vulnerable  groups.1  For  industries,  retail  electricity  prices  have 
almost doubled: for a medium-sized industrial consumer, prices in 2023 remained 97% above 
their  2014-2020  average.2  The  gap  in  energy  prices  between  the  EU  and  our  main 
competitors is growing,3 with the risk that new investments favour countries outside Europe 
and  that  existing  industries  relocate,  leading  to  a  potential  drain  of  critical  industries  that 
drive  the  EU’s  economy  and  resilience  and  create  quality  jobs.4  The  current  situation 
undermines the EU’s global standing and international competitiveness.5 

3

2,5

2

1,5

1

0,5

0

2019

2020

2021

2022

2023

2024

EU/US

EU/JP

EU/CN

Figure 1. Ratios of industrial retail electricity prices in global markets (European Commission estimations) 
(A ratio of more than 1 means that EU prices are higher than those of the corresponding non-EU country) 

Therefore,  the  Commission  is  launching  an  ambitious  programme  to  support  our  citizens, 
businesses  and  industry  by  driving  growth  and  investment  and  promoting  decarbonisation 
efforts.  

1 Eurostat data base (Online data code: ilc_mdes01) 
2 Study on energy prices and costs – Evaluating impacts on households and industry – 2024 edition; Trinomics, 
2025 
3 See Figure 1. EU electricity retail prices for industry were in Q2 2024 2.2 times those in the US, twice those in 
China and 1.2 times higher than in Japan (historically lower).  
4 Employment in the renewable energy sector reached about 1.8 million in the EU in 2023.  Renewable energy 
and jobs: Annual review 2024; IRENA in collaboration with ILO, 2024 
5  The  future  of  European  competitiveness,  part  B,  Figure  2;  Mario  Draghi,  September  2024.  Widening 
divergence of retail prices across the EU, from less than EUR 100/MWh (PT, FI, SE) to over EUR 250/MWh 
(CY, HU, NL). 

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The Competitiveness Compass for the EU6 will guide the work in the coming five years to 
reignite  economic  dynamism  in  Europe.  The  Clean  Industrial  Deal,  our  growth  and 
prosperity strategy bringing together climate and competitiveness, is a central component 
of this work. Supporting the Clean Industrial Deal, the Action Plan for Affordable Energy 
will  focus  on  decreasing  energy  costs  for  citizens,  businesses,  industry  and  communities 
across the EU, considering the needs of all people, including vulnerable groups. 

This  action  plan  presents  measures  to  lower  energy  bills  in  the  short  term,  while 
accelerating  the  implementation  of  much-needed  cost-saving  structural  reforms  and 
strengthening  our  energy  systems  to  mitigate  future  price  shocks.  With  the  full 
engagement  of  Member  States  and  all  relevant  stakeholders,  these  eight  actions  for 
affordable  energy  will  reduce  energy  costs  and  help  build  a  genuine  Energy  Union  that 
delivers  competitiveness,  security,  decarbonisation  and  a  just  transition,  passing  on  to  end 
users the benefits of cheaper energy.  

2.  WHAT IS DRIVING UP ENERGY COSTS IN THE EU  

Energy bills are determined by a combination of factors: energy supply costs linked to the 
overall level  of consumption, network costs, and excise levies and taxation. In turn, energy 
supply costs depend on wholesale prices, driven by diverse factors like supply and demand 
conditions,  energy  mix,  interconnections,  competition,  weather  and  geopolitical  realities  as 
well as retail competition among suppliers. These factors explain the  structural challenges 
of the EU energy system. 

First,  Europe’s  reliance  on  imported  fossil  fuels  causes  energy  price  volatility  and  higher 
supply costs, while making the EU more vulnerable to  external  pressure  and global market 
uncertainty. While demand for natural gas declined by 18% between August 2022 and May 
2024,7 the EU remains exposed to global fossil-fuel price fluctuations, with 90% of its natural 
gas  demand  covered  by  imports.8  The  consequences  of  excessive  supply  dependence  were 
evident  during  the  recent  energy  crisis.  Russia’s  weaponisation  of  its  gas  exports  led  to 
supply uncertainties and sharp price spikes. In 2022, the EU’s fossil-fuel energy import bill 
reached  EUR 604  billion,  after  a  historic  low  of  EUR 163  billion  in  2020.9  With  a 
substantial share (28.9%) of the EU’s average electricity generation mix still based on fossil 
fuels,10  and  transport  largely  fuelled  by  oil  products,  fossil-fuel  import  costs  have  a 
significant impact on consumers’ energy bills (see Figure 2). 

6 A Competitiveness Compass for the EU (COM(2025) 30 final) 
7 Impact Assessment Report for Europe’s 2040 climate target (SWD(2024) 63 final, Annex 8 (part 3/5), section 
1.2.3) 
8 Eurostat natural gas statistics. Europe imported 273 bcm in 2024, compared to 334 bcm in 2022. 
9 Report on energy prices and costs in Europe (COM(2024) 136 final); European Commission, March 2024 
10 European electricity review 2025; EMBER, January 2025 

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Figure 2. EU electricity bills for households (DD band, left) and industry (ID band, right) in real 2023 prices11 

Second,  inefficiencies  and  lack  of  full  integration  in  the  electricity  system  also  impact 
energy bills. Europe has the most integrated grid globally, but more needs to be achieved as 
regards  interconnections,  grid  infrastructure,  energy  system  integration  and  system 
flexibility  to  boost  the  integration  of  cheaper  and  cleaner  energy  sources.  Lengthy 
permitting  procedures  for  clean  energy  and  grid  projects  further  hinder  progress.  Current 
estimates  are  that  by  2030,  around  half  of  the  EU’s  cross-border  electricity  new  capacity 
needs will not be addressed,12 holding back the complete integration of our energy market.    

Finally,  increasing  system  costs  covered  by  network  charges  and  taxes  and  levies  further 
drive  up  electricity  prices  and  constitute  a  substantial  part  of  the  bill,  which  may  further 
increase as our networks will need considerable investments in the coming years.  

3.  BUILDING A GENUINE ENERGY UNION TO DELIVER MORE AFFORDABLE 

ENERGY  

EU energy policy at a crossroads 

Energy is a building block and a driving force of our Union. However, although we have built 
a strongly interconnected energy market, we do not yet have a genuine Energy Union. We 
are  at  a  critical  turning  point  for  the  European  Union.  The  challenges  facing  us  are  clear 
and urgent. Our energy costs remain comparatively high, putting Europe at a real risk of 
deindustrialisation and posing a critical threat on our economy.  

The  cost  of  inaction  is  higher  than  the  cost  of  action.  Stalling  halfway  on  the  path  to 
decarbonisation places a burden on our economies and our industrial capacity. For example, 
in 2023, the curtailment of renewable energy in Germany alone cost over EUR 3 billion, with 
the benefits of the production of this cheap energy being lost for consumers and businesses. 
Furthermore,  as  the  electricity  system  grows  in  complexity,  so  do  the  costs:  costs  for 
managing grid congestion, mainly from re-dispatching, reached a peak of EUR 5.2 billion in 
202213 and could rise to EUR 26  billion by 2030.14 The most effective way to manage these 
costs  is  through  shared  and  strategic  European  investment  while  ensuring  technological 
neutrality. 

The cost of failing to complete the transition is compounded by the  cost of not taking full 
advantage of our single market and its potential to reduce prices. For example,  Southeast 

11 Eurostat,  nrg_pc_204_c and nrg_pc_205_c, 17 February 2025 
12 Electricity Infrastructure Monitoring Report 2024; ACER, December 2024 
13Network  tariffs  may  significantly  increase  overtime  by  60%  by  2050  compared  to  2022;  Transmission 
capacities for cross-zonal trade of electricity and congestion management; ACER, July 2024 
14 Redispatch and Congestion Management; Joint Research Centre, May 2024 

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Europe  experienced  price  spikes  during  evening  hours  last  summer  averaging  at  over  EUR 
250/MWh, among others driven by lack of cross-border capacity and insufficient flexibility 
that could have been eased by a more interconnected energy system.  

Powering the Clean Industrial Deal through a robust Energy Union 

If  the  challenges  are  clear,  so  is  the  role  of  our  Energy  Union  to  address  them.  The 
energy  crisis  revealed  where  we  need  to  continue  strengthening  our  infrastructure  and 
deepening EU energy market integration. 

We have  already taken  major steps. With the REPowerEU Plan, we have made our  energy 
system  more  resilient  by  boosting  energy  efficiency,  rolling  out  clean  generation  and 
diversifying  our  supplies.  Progress  has  been  evident.  Newly  installed  wind  and  solar 
capacities reached record levels  of 78  GW in  2024 and heat  pump sales hit 3 million  units 
both  in  2022  and  2023.  In  2024,  renewables  generated  a  new  all-time  high  of  48%  of 
electricity in the EU, increasing from 45% in 2023 and 41% in 2022. Our efforts have paid 
off: since the spring of 2023, gas prices have come down considerably. In the coming weeks, 
the  Commission  will  also  give  an  additional  push  towards  the  full  implementation  of 
REPowerEU  to  completely  end  Russian  energy  imports.  Still,  to  deliver  lasting  long-term 
solutions, we must not roll back but continue moving forward. We need to finally achieve a 
genuine Energy Union through three main enablers.  

First,  we  need  a  fully  integrated  energy  market,  supported  by  an  interconnected  and 
digitalised  network  and  a  cohesive  regulatory  and  governance  regime.  The  Internal 
Energy Market and the integration of European electricity markets already benefit consumers 
by around EUR 34 billion every year.15 Further integration could increase these benefits 
to up to EUR  40-43  billion per year by 2030.16 We will need massive grid upgrades, and 
this should be done in the most cost-efficient way: wider use of grid enhancing technologies, 
and  flexible  use  of  the  system  could  save  up  to  35%  in  conventional  grid  expansion  costs. 
Regional  cooperation  across  Europe,  underpinned  by  better  interconnectivity  and  closer 
coordination,17 can reduce the need for flexibility investments by up to 20%.18 

Second, we need a  decarbonised  energy system, driven by a substantial scale-up of clean 
energy and electrification, with energy efficiency at its centre. The world is moving faster 
than  ever  towards  clean  energy.  Global  spending  on  clean  energy  hit  a  record  of  EUR  1.9 
trillion last year. For every euro invested in fossil fuels, two euros are invested in renewable 
energy.  We  will  deliver  decarbonisation,  because  decarbonisation  delivers  not  only  clean 
energy, but also quality jobs, growth and energy security. In addition, reducing the share of 
fossil  fuels  in  the  European  energy  system  would  further  shield  consumers  from  market 
volatility. 

Third,  with  natural  gas  still  remaining  a  part  of  Europe’s  energy  consumption,  we  need  a 
more  transparent  and  competitive  well-functioning  gas  market,  while  continuing 
diversification and demand reduction efforts. The EU remains exposed to volatile movements 
of international gas prices. We need to make sure that gas is traded on fair terms, and we need 

15 ACER’s final assessment of the EU wholesale electricity market design; ACER, April 2022 
16 Integrating the EU energy market to foster growth and resilience; IMF, January 2025. Realising the benefits 
of European market integration; Baker et al., 2018; Benefits of an integrated European energy market; Booz  et 
al., 2013 
17 Redispatch and Congestion Management; Joint Research Centre, May 2024 
18 Power system flexibility in the Penta region; Trinomics and Artelys, March 2023 

4 

 
 
to leverage our collective strength. As an example, the demand aggregation mechanism has 
matched 42 billion cubic metres since 2023, which is 13% of the EU gas consumption during 
that period.  

In short, only by accelerating investments in clean energy and infrastructure, ensuring rapid 
acceleration  of  electrification,  increasing  energy  efficiency  and  bringing  transparency  and 
fairness  to  gas  markets  can  we  make  energy  affordable.  That  is  why  Europe  needs  this 
Action Plan:  to  deliver  a fast  and firm  response that lowers  energy costs in  the immediate 
term, to future-proof the energy system, to attract investments and to ensure delivery. In this 
respect, streamlining our regulatory framework and reducing administrative burdens can help 
businesses  by  providing  visibility  and  simplicity  for  the  deployment  of  clean  technologies. 
Concerted  action  and  engagement  of  European  leaders  at  the  highest  political  level  is 
essential to deliver on this transformative Action Plan. 

Without the energy transition, the EU’s fossil fuel import bill in 2025 would be EUR 45 
billion higher than in 2019, representing an estimated 0.25% of the EU’s GDP.  

The implementation of this Action Plan will enable the EU to fast track the benefits of the 
clean  transition. This will translate into a drop in the EU’s fossil fuel  import bill year 
after year towards EUR 130 billion of savings per year by 2030, representing an estimated 
0.65%  of  the  GDP  by  2030.19  Such  savings  from  reducing  fossil  fuel  use  can  be  roughly 
broken down along three lines: (i) increasing electrification and energy efficiency, which in 
turn  decreases  total  fossil  fuel  demand  (25%),  and  (ii)  replacing  persistent  fossil-fuel 
demand in electricity generation with clean energy (50%), supported by (iii) sufficient grid 
capacity,  smart  grid  infrastructure  and  energy  system  flexibility  (25%).  The  savings  in 
the EU’s fossil fuel import bill will increase annually up to EUR 260 billion by 2040.20 

4.  AN ACTION PLAN FOR AFFORDABLE ENERGY FOR ALL EUROPEANS  

This  Action  Plan  suggests  immediate  concerted  action  by  the  European  Commission,  the 
European  Parliament,  Member  States  and  industry  to:  (i)  lower  energy  costs  for  all;  (ii) 
complete the Energy Union; (iii) attract  investments; and (iv) be ready  for potential energy 
crises.  Most  actions  will  be  delivered  in  the  course  of  2025,  focusing  on  the  actions  that 
bring immediate relief for energy consumers. 

19 2025 savings compared to import volumes in 2019, with estimations based on assumptions of 2024 fossil fuel 
spot prices. With an assumption of 2022 (higher) prices, the annual savings would grow from EUR 140 bn in 
2025 (about 0.75% of GDP) to EUR 340 bn in 2030 (1.75% of projected GDP) and up to 600 bn in 2040 (2.7% 
of projected GDP). 
20  1.2%  of  the  estimated  EU  GDP.  The  2040  savings  are  calculated  under  the  assumption  of  a  90%  GHG 
reduction ambition in 2040. 

5 

 
 
Figure 3. The four pillars of the Action Plan for Affordable Energy 

Pillar I: Lowering energy costs 

Lowering the bill requires addressing its three cost components: network and system costs, 
taxation,  and  supply  costs.  Moreover,  with  natural  gas  being  a  significant  part  of  the 
electricity  mix,  ensuring  well-functioning  gas  markets  that  deliver  market-based  prices  will 
also help lower both the gas and the electricity bills. Further, energy efficiency and savings 
will reduce the amount of electricity that consumers need to buy. 

Action 1: Making electricity bills more affordable 

Member  States  can  lower  electricity  bills  already  today.  This  requires  immediate  action  as 
well as greater ambition, particularly in the areas of network charges and taxation. 

a)  Network charges 

Network  charges  finance  the  physical  upgrade  of  grids  and  the  operation  of  the  system. 
Significant  capital  is  required  for  investments  in  modernising  and  expanding  the  electricity 
network. This is essential to facilitate the deployment of renewables, electrification and new 
industrial and business demand. At the same time, the costs of operating the power system 
are  growing.21  Network  charges  that  incentivise  system  efficiencies  and  use  of  lower  cost 
clean electricity could rapidly reduce the costs of operating the overall system, for example 
by  decreasing  re-dispatching  needs  and  costs,  lower  peak  demand  and  thereby  grid 
investment  needs and, ultimately, reduce the network charges component  of the energy bill 
compared to no action taken.   

In  addition,  given  the  magnitude  of  investments  needed,  spreading  these  investments  over 
time can help ensure that costs remain contained for consumers. This is particularly relevant 

21 From 2020 to 2022, re-dispatching costs almost doubled to EUR 4.2 bn, countertrading doubled to EUR 0.8 
bn and other costs decreased to EUR 0.2 bn Congestion management costs are driven by the efficiency in 
system operations and the cost of electricity supply, which was particularly high in 2022 driven by the energy 
crisis. Electricity infrastructure development to support a competitive and sustainable energy system; ACER, 
Dec. 2024 

6 

 
 
 
when investments anticipate uncertain future electricity demand growth due to electrification, 
where  charging  all  such  investments  on  current  users  may  unfairly  burden  early  adopters, 
slowing down electrification.22  

What 
How 

More efficient network charges to reduce energy system costs 
The Commission will: 

- 

- 

- 

- 

put  forward  a  design  of  tariff  methodologies  for  network  charges  to 
incentivise  the  use  of  flexibility  and  investments  in  electrification,  while 
maintaining the incentive to invest in the grid and ensuring a level playing 
field. This will enable users of the grids to adjust their energy use or shift it 
towards times and places where the cheapest energy sources are available 
and when it is the most cost efficient for the overall system; 
if  necessary,  put  forward  a  legislative  proposal  to  make  it  legally 
binding;  

put  forward  guidance  to  explain  how,  where  relevant  in  targeted  cases, 
Member  States could make  use  of their  public  budget to lower  network 
charges to cover the additional costs resulting from measures to accelerate 
decarbonisation  and  market  integration,  notably  such  as  interconnectors, 
major  network  upgrades  or  offshore  grid  connection  infrastructure,  in 
compliance  with  State  aid  rules  and  competition  law.  For  example,  State 
budget  can  thereby  enable  faster  depreciation  for  grid  investors  while 
avoiding price spikes for consumers; 
put  forward  guidance  on  anticipatory  investments  for  electricity  grids 
while  ensuring  affordability  for  consumers  to  further  support  system 
operators, regulatory authorities and Member States. 

When 
Impact 

Q2 2025 
Flexibility  will  decrease  peak  demand  and  lower  energy  system  costs  and  total 
new  grid  investment  needs.  By  avoiding  an  uncontrolled  increase  of  grid 
management costs otherwise going up to EUR 26 billion by 2030, it will lower the 
network charges that consumers will pay as part of the electricity bill.  

b)  Taxes and levies 

High  taxes  on  electricity  increase  bills  and  the  current  structure  of  taxation  does  not 
disincentivise  the  use  of  fossil  fuels  over  the  use  of  electricity,  therefore  slowing  down 
electrification  and  demand  for  cheap  homegrown  electricity.  Two  main  taxes  are  levied  on 
electricity:  VAT  and  energy  taxation  –  complemented  by  other  national  taxes.  The  Energy 
Taxation  Directive23  provides  for  a  minimum  taxation  (excise  duties)  of  electricity  and 
enables Member States to lower the tax rate down to zero where legally possible for energy-
intensive industries and households and for all industries in case of electricity from renewable 
sources.  

22 Such measures, applied to natural or legal monopolies, are unlikely to constitute State aid and can align with 
cost-reflectiveness network tariff principles. See points 188 and 211 of the Commission Notice on the Notion of 
State aid, as well as points 373-375 CEEAG. For the case of the German Hydrogen Backbone, the Commission 
found such a measure to be compatible State aid (Commission Decision C(2024) 4366 final in case SA.113565). 
23  Council  Directive  2003/96/EC  on  the  Community  framework  for  the  taxation  of  energy  products  and 
electricity 

7 

 
 
Lowering taxation has  proven very effective in containing energy bills during the energy 
crisis,  when Member States implemented reductions  in  VAT and  energy taxes, and income 
transfers to vulnerable groups.24  In France, for example, the electricity consumption tax was 
reduced  from  EUR  22.5/MWh  to  EUR  0.6/MWh.25  Such  support  should  be  particularly 
targeted to effectively achieve the objective while minimising fiscal costs.26  

What 

How 

When 

Impact 

Lower  taxation  of  electricity  and  removal  of  non-energy  cost  components  from 
bills 
The Council should complete the revision of the Energy Taxation Directive (‘ETD’), 
proposed  in  2021,  which  aims  to:  (i)  align  the  taxation  of  energy  products  with  EU 
energy and climate policies; (ii) promote clean technologies; and (iii) remove outdated 
exemptions  and  reduced  rates  that  currently  encourage  the  use  of  fossil  fuels.  The 
Commission stands ready to continue supporting the adoption. 
The Commission recalls that Member States may (i) lower national taxes and levies in 
the electricity bill towards the minimum excise duty rates provided for in the Energy 
Taxation  Directive  of  EUR  0.5/MWh  for  businesses;27  (ii)  apply  the  reduced  VAT 
rate allowed by the VAT Directive and its amending Council Directive  of minimum 
5%;28  (iii)  eliminate  levies  that  are  not  energy-related;29  and  (iv)  shift  levies  that 
finance energy policies to the general budget.30  
In  line  with  the  Energy  Taxation  Directive,  which  allows  decreasing  taxes  down  to 
zero  for  energy  consumed  by  households  and  energy  intensive  industries,  the 
Commission  will  issue  a  recommendation  to  Member  States  on  how  to  use  such 
flexibilities and  ensure across all sectors that electricity is taxed less  than other energy 
sources while pursuing our long-term decarbonisation objectives. 
From  adoption  of  the  revised  Energy  Taxation  Directive.  Additional  Commission 
recommendations in Q4 2025. 
Immediate  reduction  of  energy  bills,  with  the  potential  to  at  least  halve  the  tax 
component  (in  EUR/MWh),  drawing  on  the  experience  of  the  taxation  reductions  in 
2022-2023  (see  Figure  2).  Accelerate  electrification  through  fiscal  incentives  and 
reduce dependence on fossil fuels. 

24 State of the Energy Union Report, ‘EU guidance on energy poverty and Commission Staff Working document 
Accompanying  the  2023  Recommendation  on  energy  poverty;  European  Commission,  2023.  National  fiscal 
policy responses to the energy crisis; Bruegel, June 2023 
25 Recommendations for future-proof electricity market design in light of the 2021-23 energy crisis; Pollitt et al., 
2024 
26 The  Commission Communication on  Fiscal policy guidance for 2024 (COM(2023) 141 final), recommends 
that  Member  States  should  target  their  measures  much  better  than  in  the  past,  refraining  from  generalised 
support and only protecting those who need it, namely vulnerable households and firms. 
27 The Energy Taxation Directive (ETD) 2003/96/EC sets minimum excise duty rates that Member States must 
apply to energy products, including electricity. 
28 The EU VAT Directive 2006/112/EC sets a minimum standard VAT rate of 15% that applies to electricity, 
natural  gas  and  district  heating  and  allows  for  a  reduced  VAT  rate  of  minimum  5%.  Council  Directive  (EU) 
2022/542 confirms a reduced VAT rate applicable for electricity at 5%. The application of the reduced rates is 
decided by Member States. Most businesses can deduct the VAT paid on electricity, provided that the electricity 
is used for taxable activities. 
29 Included directly in the bill or within the network charges.  
30 This refers especially to renewable support scheme levies. Other energy levies (e.g. nuclear decommissioning) 
are also sometimes introduced. Some Member States may opt to retain some energy-policy costs within the bill 
where  State  budgets  are  very  strained  and  to  minimise  the  risk  of  substantial  national  policy  swifts.  Costs 
associated  with  security  of  supply  measures  cannot  be  moved  to  the  budget  as  this  could  lead  to  removing 
demand response incentives and increasing overall system cost. 

8 

 
 
c) Lower supply costs by increasing retail competition 

Currently,  73%  of  EU  households  as  well  as  a  significant  proportion  of  small  to  medium-
sized enterprises are on fixed electricity contracts31. Many could lower their electricity bills 
by switching to a more competitive supplier or shifting consumption to times of lower prices 
but  are  still  facing  market  barriers.  Vulnerable  consumers  require  specific  attention. 
Affordability  measures  should  consider  the  specific  needs  of  lower-income  households, 
including flexible billing options that prevent disconnections for economically disadvantaged 
groups. Energy communities must also be strengthened to allow local communities, citizens 
and  companies  to  join  forces  and  invest  in  clean  energy  projects  at  local  level;  thereby 
allowing them to produce, sell and consume their renewable energy. It is essential that the EU 
continues  to  provide  sufficient  dedicated    funding  to  support  the  completion  of  the  Energy 
Union.   

What 

How 

Enabling  consumers  to  switch  to  cheaper  energy  suppliers,  and  to  benefit  from 
affordable renewable energy, while tackling energy poverty 
The  Commission  will  propose  a  Citizens’  Energy  Package  to  increase  citizens’ 
participation in the energy transition and strengthen the social dimension of the Energy 
Union including in particular: 

- 

- 

provide  guidance  to  Member  States  to  bring  down  existing  barriers  so 
consumers can save on their energy bills by switching supplier and changing 
contract.  This  would  include  ensuring  consumers’  understanding  of  the  bill 
through clear information and data on the energy consumption, prices to enable 
consumers to shift to hours of lower prices;32  

set  out  measures  to  reduce  energy  poverty,  including  through  energy 
efficiency, and allow consumers and communities to produce, use and sell 
renewable energy on their own terms, including via energy communities. 

When 
Impact 

Q3 2025 (Citizens Energy Package) 
Switching to the  electricity  supplier that  offers the lowest  prices  can  save  households 
EUR 150-200  per  year.33  Households  can  save  EUR  500-1,100  per  year  by 
participating in energy communities.34 

Action 2: Bring down the cost of electricity supply 

Swift and full implementation of existing EU electricity legislation is crucial to reduce the 
cost  of  electricity  supply:  recently  adopted  rules  on  permitting,  contracts,  flexibility, 
consumer  empowerment  and  market  surveillance  can  deliver  lower  costs.  This  should  be 
complemented with the following immediate actions. 

31 2024 Market monitoring report on energy retail and consumer protection; ACER-CEER, September 2024 
32 Ibid. Switching rate of electricity household consumers is 7.15% 
33 Annual report on the results of monitoring the internal electricity  and gas markets in 2021; ACER, October 
2022 
34 Collective energy sharing: CBA and survey evidence of the willingness to invest; Ovaere, 2023; benefits of 
50-50% solar & wind collective self-consumption and surplus energy sold between circa EUR 500-1,100/year 
(2020-2022). 

9 

 
 
a)  Long-term electricity supply contracts 

High and volatile gas prices drive up electricity prices. Power purchase agreements (PPAs) 
and  long-term  contracts  between  clean  energy  developers  and  industrial  consumers  and 
companies  allow  the  latter  to  benefit  from  stable  and  cheap  electricity  prices  for  a  long 
duration.  PPAs  can  play  a  role  in  de-risking  projects  by  enabling  renewable  energy 
developers to secure a long-term price for their output, which supports investment decisions. 
They can also provide long-term price stability for industrial consumers.  While demand for 
PPAs  is  increasing,35  these  contracts  need  to  be  further  encouraged  and  mainstreamed, 
including to energy-intensive businesses that do not have wide access to them and may still 
face  barriers.  The  Commission  will  step  up  efforts  under  the  electricity  market  rules  to 
decouple  electricity  bills  from  price  volatility  by  boosting  the  uptake  of  long-term 
electricity supply contracts.  

What 
How 

Decoupling retail electricity bills from high and volatile gas prices  
Reduce barriers for new actors,36 in particular energy-intensive industries, to conclude 
long-term  energy  contracts  by  supporting  national regimes  and  introducing  de-risking 
tools. The Commission will: 

- 

- 

- 

launch,  with  the  European  Investment  Bank  (EIB),  a  pilot  programme  to 
counter-party part of the Power Purchase Agreements undertaken by companies 
for the long-term purchase of electricity generation for an indicative amount of 
EUR 500 million. In line with the approach in the Electricity Market Design the 
Commission will engage with the EIB to promote PPAs, including cross-border 
PPAs, in a technologically neutral way;  
provide  guidance  to  Member  States  on  the  design  of  effective  contracts  for 
difference, including their combination with PPAs; 
adopt  new  rules  to  support  the  further  development  of  European  forward 
markets and increase hedging opportunities. 

When 

Impact 

Removal of regulatory barriers to start immediately.  
Q2 2025: Coordination with the EIB 
By Q4 2025: Guidance to Member States on the design of contracts for difference 
Greater price stability for buyers by helping European companies to manage volatility 
in  energy  costs  and  to  get  access  to  better  cross-border  hedging  opportunities.  Long-
term  contracts  will  also  give  renewable  energy  producers  the  guaranteed  income 
required  to  reduce  cost  of  capital,  helping  relieve  pressure  on  consumers  and 
taxpayers.37 

b)  Reduce permitting times for new clean power supply and energy infrastructure 

Renewable  power  generation  has  become  the  default  source  of  least-cost  new  power 
generation.38,  39  However, the  lead times for new projects  can be up to  7-10 years for wind 

35 By 2024, a cumulative contracted capacity of 48.4 GW had been signed in the EU (Source: RE-Source) 
36 Such as credit worthiness, contract complexity and hedging availability. Commercial PPAs; Baringa for EIB, 
2022 
37 Phased European Union electricity market reform; Bruegel, March 2023 
38 Renewable power generation costs in 2023; IRENA, September 2024 
39  Beyond  streamlining  permitting,  other  factors  support  the  drive  down  of  energy  project  costs,  such  as 
ensuring  access  to  competitive  financing  conditions,  a  resilient  supply  chain  with  sufficient  domestic 
manufacturing capacity and a skilled workforce, and technological developments. 

10 

 
 
projects, up to 8-10 years for distribution grid projects40 and at times even up to 17 years for 
transmission  grid  projects.41  This  is  severely  hampering  the  massive  roll-out  of  renewable 
energy and can impact the economic model of projects.  

At all levels – the EU, national, regional and local – authorities must make a major effort 
to  accelerate  the  permitting  procedures  for  grid,  storage  and  clean  energy  projects,  as 
outlined  in  the  Draghi  report.  This  includes  permitting  for  infrastructure  that  can  provide 
flexibility  to  the  electricity  system,  for  example  electric  vehicle  recharging  points.  The 
Commission calls on Member States to rapidly implement the recently adopted legislative 
framework  for  permitting  of  clean  energy  projects.42  The  impact  of  recent  permitting 
reforms is already visible in Member States that have made extensive use of the emergency 
regulation. For example, as a consequence of the application of swifter permitting during the 
energy crisis in Germany, permits for new onshore wind projects have more than tripled 
since  2022,  ramping  up  the  number  of  installations  by  48%  in  one  year  (2023)43  and 
about  3,300  km  of  transmission  grids  have  been  approved  since  Q2  2023,  saving  12 
months to three years in permitting time.  

In  addition,  a  large  part  of  the  time  taken  by  the  permitting  processes  for  clean  energy 
investments, storage and grids is dedicated to environmental assessments. Targeted updates 
to the legislative framework on environmental assessments are necessary to significantly 
simplify  and  shorten  the  permitting  procedures  for  such  projects,  while  maintaining 
environmental  safeguards  and  protecting  human  health.  Shorter  deadlines  for 
permitting energy infrastructure at national level are also key to lower energy costs. This 
can be eased by measures such as tacit approvals for certain administrative decisions in the 
permitting  process,  where  this  principle  exists  in  the  national  legal  system,  and  one-stop 
shops for developers. 

The  Draghi  report  also  concludes  that  greater  focus  is  needed  on  digitalising  national 
permitting processes across the EU and addressing permitting authorities’ lack of resources. 
The  permitting  process,  and  the  environmental  and  geological  data  needed  for  the  clean 
energy  investments,  will  need  to  be  digitalised.  Moreover,  more  granular  data  on  the 
resource potential for wind and solar across the EU will help Member States in mapping the 
areas  needed  to  achieve  their  national  targets,  as  well  as  in  designating  of  renewable 
acceleration  areas,  as  envisaged  under  the  Renewable  Energy  Directive.  Streamlined 
permitting  will  cover  hybrid  energy  projects  with  several  technologies,  such  as  a 
renewable generation and storage, using the same grid connection. Finally, the Commission 
will  assess  the  possibility  of  streamlining  current  permitting  and  licensing  practices  for  the 
deployment of new nuclear energy technologies such as Small Modular Reactors (SMRs). 

40 Guidance on EU permitting-related provisions on grid and renewable energy projects; EU DSO Entity, Jan. 
2025 
41 Uckermark 115-km 380 kV overhead line project (see S&P) 
42 Renewable Energy Directive; TEN-E Regulation; Renewable gas, Natural gas and Hydrogen Market Directive 
43 15.2 GW in 2024 (EE-Statistik Auswertung Januar 2025). See also Reuters.  

11 

 
 
What 
How 

Reduce permitting times for an accelerated energy transition  
Member States should: 

- 

- 

accelerate  permitting  and  regulatory  procedures  by  rapid  legislation 
transposition and implementation; 
strengthen  national  permitting  authorities,  including  through  public  funds 
and with sufficient human capital, and explore unified digitalisation approaches 
for permitting and for environmental assessments reports . 

The Commission will support Member States by:  

- 

- 

- 

- 
- 

innovative 

forms  of  renewables 

producing  dedicated  guidance  on 
deployment44 and on dedicated grid and storage areas;  
deploying  dedicated  implementation  support  by  expanding  the  Accele-RES 
implementation plan and, inter alia, fully exploiting the potential of the Expert 
group  on  permitting  and  of  the  Concerted  Action  (CA-RES);45  this  will  be 
supplemented by an implementation dialogue to identify remaining obstacles 
to permitting and possible way forward; 
reinforcing the exchange of  best practices and the  identification of barriers 
and  solutions  via  networks  and  expert  groups  of  national  authorities 
competent  for  permitting  and  dialogue  with  regional,  national  and  local 
stakeholders; 
upgrading an online guiding tool on permitting for Member States; 46 
providing  Technical  Support  Instrument  (TSI)47  support,  raising  awareness 
among  Member  States  of  the  2025  call  and  launching  a  new  TSI  flagship  in 
2026.  

The Commission will: 

-  put  forward  legislative  proposals  to  accelerate  permitting  for  grids,  storage 
including  streamlining  environmental  assessments  and 

and  renewables, 
shortening deadlines for permits as part of the European Grid Package; 
assess  the  streamlining  of  licencing  practices  for  new  nuclear  energy 
technologies and publish a SMR Communication. 

- 

When  

As soon as possible: Adaptation of national permitting regimes. 
Mid-2025:  

- 

- 

- 

publication of new, more granular data on potentials for offshore wind and for 
solar PV on the Energy and Industry Geography Lab (April 2025); 
guidance  on  innovative  forms  of  renewables  deployment,  and  on  grid  and 
storage acceleration areas;  
implementation support. 

Together with the Grid Package: legislative proposals for acceleration of permitting 
processes for grid, storage and renewable energy projects. 
2026: New TSI flagship call; SMR Communication 

44 Such as agri-PV, building-integrated PV (BIPV) and balcony solar systems. 
45 Concerted Action on the Renewable Energy Sources Directive (https://www.ca-res.eu/)  
46 Renewable Energy Directive Q&A tool 
47 Regulation (EU) 2021/240 establishing a Technical Support Instrument 

12 

 
 
Impact 

Implementation of existing EU legislation by Member States and the new measures can 
reduce  the  length  of  permitting  procedures  to  less  than  six  months  for  simpler 
projects such as repowering in renewable acceleration areas and 12 months outside of 
these;  less  than  12  months  or  two  years  for  renewable  projects  (in  or  outside 
acceleration areas) and; for complex ones like offshore wind, less than two years in 
renewable  acceleration  areas  and  three  years  outside  those.  Furthermore,  the 
strengthened legislative framework will address existing gaps.  

c)  Grids  and  interconnectors  as  enablers  of  the  energy  transition  and  industrial 

decarbonisation 

An  efficient  network  ensures  that  energy  flows  from  where  it  is  produced  to  where  it  is 
needed.  It  mitigates  price-peak  episodes  and  ensures  that  everyone  benefits  from  energy  at 
the  best  cost.  It  is  thus  important  to  interconnect  areas  with  vast  available  clean  energy 
potential with European regions with high energy demand, so that affordable energy can be 
delivered to where it is needed most. 

EUR 584 billion is necessary for investments in the electricity grids this decade.48,49 Cross-
border infrastructure needs are often not matched by concrete projects, leading to undue 
price disparities between some regions, such as recently observed in  southeast  Europe. The 
Agency for the Cooperation of Energy Regulators (ACER) finds that 32 GW of cross-border 
capacity needed by 2030 remains unaddressed50 Major infrastructure projects of regional 
or  EU-wide  significance  face  challenges  in  relation  to  increasing  project  costs51  and  an 
equitable  sharing  of  costs  and  benefits.52  Four  examples  of  such  missing  flagship  links 
include:  

•  Creation of an integrated offshore network in the Northern Seas; 
•  Further reinforcing physical integration of the Baltic States with Central and Northern 
Europe  following  the  Baltic  synchronisation  and  ensuring  security  of  cross-border 
infrastructure in the Baltic Sea region; 
Increasing the interconnection level of the Iberian Peninsula with the rest of Europe;   
Increasing  interconnectivity  and  market  integration  between  Southeast  and  Central 
Europe. 

• 
• 

The  benefits  of  these  flagship  projects  will  expand  beyond  the  Member  States  hosting 
projects.  Therefore,  only  through  the  design  of  new  projects  and  the  acceleration  and 
completion of existing ones, can the Energy Union materialise. Given the scale and impact of 
these projects, it is essential that the EU continues to provide sufficient funding to support 
the  completion  of  the  Energy  Union’s  interconnectors  at  both  cross-border  and  national 
levels.  Investing  to  achieve  the  EU’s  decarbonisation  goals  and  removing  barriers  to  our 
Energy Union offers the opportunity  for Europe  to  lower  energy prices, increase its  energy 
security  and  take  the  lead  in  clean  rtechnologies.53  Furthemore,  the  Communication  on  the 

48 EU Action Plan for Grids (COM(2023) 757 final) 
49 Redispatch and Congestion Management; Joint Research Centre, May 2024. 
50 Electricity infrastructure development to support a competitive and sustainable energy system; ACER, Dec. 
2024 
51 Celtic Interconnector from EUR 930M to 1,482M (CRE), Biscay Bay from EUR 1,750M to 2,600M (CRE). 
Princess Elisabeth costs are reported to have grown from est. EUR 2.2 bn to EUR 7-8 bn (Brussels Times: 1 and 
2). 
52 In 2024, a SE-DE interconnector was cancelled (see FT) due to discrepancy on consumer surplus distribution. 
53 The road to the next multiannual financial framework (COM(2025) 46 final, pages 5 and 8) 

13 

 
 
road  to  the  next  Multiannual  Financial  Framework54  acknowledged  that  we  need  to  ensure 
that the EU budget supports European public goods, notably cross-border projects. 

At  the  same  time,  existing  infrastructure  needs  to  be  used  efficiently.  For  example,  at  least 
70% of the capacity of interconnectors should be made available for cross-border electricity 
trading, but most Member States are still far off this target.55 

At  national  level,  grid  connection  requests  to  distribution  networks  are  growing 
exponentially  across  Europe  and  create 
long  queues,  slowing  down  renewables, 
electrification  and  the  establishment  of  industrial  clusters,  and  hampering  investments. 
Beyond electricity, new hydrogen, carbon and local heat networks are necessary.  

What 
How 

When 
Impact 

Accelerating the expansion, modernisation and digitalisation of grids  
Building on the actions of the Grid Action Plan adopted in 2023, the Commission will 
put  forward  a  European  Grid  Package  consisting  of  legislative  proposals  and  non-
legislative  measures  to,  among  others,  simplify  the  trans-European  energy  networks 
(TEN-E Regulation), ensure cross-border integrated planning and delivery of projects, 
especially on interconnectors, streamline permitting, enhance distribution grid planning, 
boost  digitalisation  and  innovation  as  well  as  increase  visibility  of  manufacturing 
supply needs. It will follow a top-down planning approach, integrating regional and EU 
interests and develop effective cost sharing mechanism (e.g. for cross-border projects), 
for an optimised energy system.  
The EIB will also introduce a ‘grids manufacturing package’ for the European supply 
chain, modelled on the Wind Package, to provide counter-guarantees to manufacturers 
of grid components, with an indicative amount of at least EUR 1.5 billion.   
European Grid Package to be put forward by Q1 2026. 
Investing  EUR  2  billion per  year  in  cross-border networks  provide  EUR  5  bn  in 
benefits  for  citizens  yearly.56  Anticipatory  investments,  asset  performance  excellence 
and  grid-friendly  flexibility,  could  reduce  investment  needs  related  to  distribution 
grids  by  EUR  12  bn  annually,57  representing  18%  of  the  total  investment  needs.58 
Prioritising  regional  or  EU  benefits  in  national  plans  limits  inefficiencies  and 
unnecessary costs to be borne by consumers. 
The deployment of grid enhancing technologies is not widespread, while they could 
expand  network  capacity  by  20-40%  by  2040  and  save  up  to  35%  in  conventional 
grid expansion costs.59 

d)  Boosting flexibility 

More  flexibility  in  the  system,  for  example  with  storage  and  demand  response,  helps 
manage  demand  and  supply  imbalances  by  encouraging  customers  to  shift  electricity 
consumption  to  times  when  electricity  is  more  plentiful  or  demand  is  lower,  and  therefore 
when electricity is cheaper. This reduces price spikes and negative price episodes, reducing 

54 Register of Commission Documents (COM(2025)46) 
55 Many TSOs in highly meshed areas of the EU power grid made available, on average, between 20% and 50% 
of  the  physical  capacity  of  certain  network  elements  in  2023.  Thus,  far  from  reaching  70%.  Cross-zonal 
capacities and the 70% margin available for cross-zonal electricity trade; ACER, July 2023 
56 System needs study; ENTSO-E, May 2023. 64 GW include non-EU peripheric countries. 
57 The role of electricity distribution systems in assessing flexibility needs; Joint Research Centre, 2024 
58 Grids for Speed; Eurelectric, May 2024 
59 Moreover, technologies like weather sensors can help improve electricity system operation. 

14 

 
 
volatility  and  contributing  overall  to  lower  and  more  stable  electricity  prices.  Electrified 
demand such as new electromobility fleets can play a role in providing flexibility services. 

In many Member States, demand response and storage face barriers60 to accessing wholesale 
markets, or to participating in ancillary and congestion management services. In 10 Member 
States,  aggregators  do  not  have  a  properly  defined  legal  framework,  which  prevents  them 
from  participating  in  those  services  that  can  help  provide  benefits  to  consumers.  In  10 
Member  States,  fewer  than  30%  households  have  access  to  smart  metering  systems 
(providing  real-time  information  about  energy  consumption).  Roll-out  needs  to  be 
accelerated.61  Some  industrial  consumers  can  significantly  contribute  to  grid  flexibility  by 
shifting  their  energy  use  to  times  of  low  demand,  reducing  costs  and  improving  system 
stability. 

What 
How 

Increasing system flexibility by deploying storage and demand response  
Member States need to: 

- 

quickly  implement  the  EU  rules  on  market  access  for  storage  and  demand 
response and remove national barriers.  

The Commission will: 

- 

- 

- 

clarify  the  State  aid  requirements  for  non-fossil  flexibility  schemes  in  the 
new  State  aid  framework,  making  it  easier  for  Member  States  to  design  their 
support  mechanisms  to  give  consumers  the  incentive  to  provide  flexibility  to 
the system; 
adopt new rules on demand response to make sure consumers can take full 
financial  advantage  of  flexibility  These  rules  will  address  the  remaining 
barriers  that  hamper  demand  response  and  storage  services  in  the  internal 
electricity market; 
seek Member States’ views on a clean flexibility instrument based on PPAs 
and  industry  committing  to  consume  clean  electricity,  while  designing  it  in  a 
way  that  sufficiently  limits  the  risks  of  competition  distortions  and  subsidy 
races in the Single Market, as required by State aid rules. 

When 

Impact 

Member  States  to  remove  national  barriers  immediately.  Commission  revised 
framework  under  State  aid  rules  by  Q2  2025;  new  rules  on  demand  response  by  Q1 
2026. 
The  complete  delivery  of  an  electricity  system  underpinned  by  market  integration, 
renewable  generation  and  flexible  capacity  could  result  in  40%  lower  wholesale 
electricity  prices on  average  in  the  EU.62  More flexibility  can  provide  tangible  cost 
savings, with industry estimates showing  EUR 2.7 billion per year in avoided peak 
generation capacity by 2030.63  

60 Demand response and other DER: what barriers are holding them back; ACER, February 2024  
61 2024 Market Monitoring Report on Energy Retail and Consumer Protection; ACER and CEER, September 
2024 
62 Energy and climate transition: How to strengthen the EU’s competitiveness; Business Europe, July 2024 
63 Demand-side flexibility: Quantification of benefits in the EU; DNV for smartEn, September 2022 

15 

 
 
Demand  flexibility  should  also  be  promoted  on  the  retail  market  as  a  deal  offering  lower 
prices  for  voluntary  industries  and  consumers  willing  to  participate  in  energy  system 
integration. 

What 
How 

Guidance on promoting remuneration of flexibility in retail contracts  
The Commission will: 

- 

- 

develop  guidance  on  promoting  remuneration  of  flexibility  in  retail 
contracts; 
put  forward  a  variety  of  standardised  market-based  conform  systems 
tailored  to  different  industrial  and  other  consumer  needs, building  on  systems 
already in place in some Member States.  

When 
Impact 

Q4 2025 
Fair  remuneration  in  retail  contracts  of  flexibility  provided  by  consumers  can 
reduce  their  electricity  costs  by  up  to  12-42%64,65  and  bring  flexibility  and  system 
integration benefits of EUR 10-29 billion.66,67 

Action 3: Ensuring well-functioning gas markets 

The  price  of  imported  natural  gas  has  a  direct  impact  on  electricity  prices  and  increases 
market volatility.  EU gas wholesale prices have not fully reverted to pre-crisis levels and are 
on  average  nearly  five  times  those  in  the  US,  as  compared  to  double  to  triple  before  the 
crisis.68 This price differential affects the competitiveness of the European industry.   

The  importance  of  gas  markets  for  our  economy  makes  it  essential  to  ensure  an  optimal 
functioning of those markets. Full regulatory oversight and close cooperation between energy 
and financial regulators is required to prevent market manipulation and to close any possible 
loopholes related to any lack of transparency, asymmetry of information and risk of market 
concentration. Earlier this month, therefore, the Commission set up a Gas Market Task Force 
to comprehensively scrutinise the EU natural gas markets and, where necessary, take action 
to ensure their optimal functioning and prevent commercial practices distorting market-based 
pricing, learning from the lessons of the energy crisis. 

To  be  able  to  address  unlawful  behaviour  in  gas  markets  in  a  swift  manner,  energy  and 
financial  regulators  should  be  effectively  equipped  to  monitor  market  developments,  detect 
and pursue any potential cases of market abuse (i.e. market manipulation and insider trading). 
Cooperation  on  enforcement  and  data  sharing  between  national  energy  and  financial 
regulators and between ACER and ESMA needs to be enhanced and taken to the next level. 
Member  States  have  to  ensure  that  regulatory  authorities  have  all  the  necessary  powers  to 

64 2024 Market monitoring report on energy retail and consumer protection; ACER-CEER, Sept. 2024 (SE case 
study) 
65  Most  households  investing  annual  ranges  of  EUR  50-145  into  home  energy  management  systems  (HEMS) 
that  make  use  of  flexible  energy  systems  (such  as  heat  pumps  with  PVs,  PVs  with  battery  storage  or  electric 
vehicles),  would  achieve  cost  savings.  Dodging  the  electricity  price  hike:  Can  demand-side  flexibility 
compensate  for  spot  price  increases  for  households  in  Germany?;  Stute  et  al  (Fraunhofer  Research  Institute), 
February 2024 
66 Energy efficiency 2.0 – Engineering the future energy system; Danfoss Impact Issue no. 4, 2023 
67 Demand-side flexibility: Quantification of benefits in the EU; DNV for smartEn, September 2022 
68  Decarbonising  for  competitiveness:  four  ways  to  reduce European  energy  prices;  Bruegel,  December  2024. 
It should be noted that the US counts with significant domestic natural gas extraction and therefore it is expected 
that it has partially lower gas wholesale prices than the EU. 

16 

 
 
pursue  and  sanction  market  abuse,  and  to  equip  them  with  the  resources  to  prioritise 
investigations  in  this  field.  Moreover,  ACER  should  use  to  the  full  extent  its  new  cross-
border investigatory powers to support national energy regulators.   

What 
How 

When 
Impact 

Ensuring well-functioning gas markets 
Earlier  this  month,  the  Commission  set  up  a  Gas  Market  Task  Force  to 
comprehensively  scrutinise  the  EU  natural  gas  markets  and,  where  necessary,  take 
action  to  ensure  their  optimal  market  functioning  and  prevent  commercial  practices 
distorting  market-based  pricing,  learning  from  the  lessons  of  the  energy  crisis.  The 
Commission  will  launch  a  broad  stakeholder  consultation  to  assess  the  need  for 
further legislative changes to ensure full and seamless regulatory oversight, align and 
strengthen  energy  and  financial  market  rules  (MiFID/REMIT),  and  reduce  the 
administrative  burden  on  companies  trading  on  financial  markets  for  energy  (single 
reporting). It will cover various aspects of the regulatory setup69, the joint supervisory 
approach  by  energy  and  financial  regulators  and  the  creation  of  a  joint  harmonised 
database of all relevant market-data with full access to all regulators. It will also cover 
certain  aspects  of  the  functioning  of  spot  markets,  such  as  the  application  of 
requirements similar to those of the financial rulebook to spot energy exchanges.  

The work of the Gas Market Task Force will conclude by Q4 2025 
The  evolution  of  gas  import  contracts  from  oil-indexation  to  gas-on-gas  market 
pricing  has already saved  the  EU  around  EUR  67  billion  over  the  past decade.70 
EU gas market integration creates net benefits in price convergence and transparency.71 
The  Gas Market  Task  Force  will focus  on  ensuring well-functioning  gas markets and 
market-based price formation in these markets. 

Alternatives  to  natural  gas  imports  should  be  explored  when  possible,  notably  via 
electrification or boosting the production of biogas and biomethane in line with REPowerEU. 
Demand  aggregation  and  joint  purchasing  can  play  a  strong  role  in  accelerating  market 
creation for energy sources and materials needed for clean energy production. By aggregating 
their  demand  and  adopting  joint  purchasing  strategies  in  accordance  with  EU  competition 
rules, EU buyers can leverage their collective economic weight, strengthen their negotiation 
position and negotiate better terms with suppliers. This approach was also adopted by Japan, 
which  has  a  longstanding  policy  of  supporting  investments  in  export  infrastructure  in 
countries  producing  liquefied  natural  gas  (LNG).  EU  joint  purchasing  power  should  be 
harnessed  by  exploring  the  option  of  longer-term  contractual  engagements  to  make  prices 
more  stable,  for  example  by  securing  gas  liquefaction  rights  or  purchase  options.  With  the 
EU’s competitiveness, geopolitical considerations and climate goals in mind, the EU and/or 
Member  States  could  also  accompany  EU  importers  in  investing  directly  in  export 
infrastructure abroad, providing preferential loans to private investors.  

In addition, better coordination among Member States and  more flexible filling trajectories, 
with  the  support  of  the  Commission,  can  help  reduce  system  stress  and  avoid  market 
distortions linked to gas storage refilling, supporting refilling at better purchasing conditions 
and security of supply. 

69 Including the parameters governing the application of the so-called ancillary activity exemption, the rules on 
circuit breakers and position limits, the requirements applying to trading venues and market participants, as well 
as certain aspects of the functioning of spot markets (e.g. the application of requirements similar to those of the 
financial rulebook to spot energy exchanges). 
70 Despite short-term pain, the EU’s liberalised gas markets have brought long-term financial gains; IEA, 2021  
71 European natural gas markets: taking stock and looking forward; Chyong, March 2019 

17 

 
 
What 
How 

Harnessing EU purchasing power to get a better deal for imported natural gas 
The Commission will: 

- 

- 

- 

immediately engage with reliable LNG suppliers to identify additional cost-
competitive imports from existing and future LNG export projects;  
propose, among others,  demand aggregation for EU companies  entering into 
tolling  contracts  at  LNG  plants  worldwide  and  LNG  supply  option  contracts 
with trusted LNG producers; 
explore  options  going  beyond  demand  aggregation  and  will  look  into  other 
approaches (e.g. the Japanese model). 

When 
Impact 

Q1-Q2 2025 
Better  opportunities  for  EU  buyers  to  secure  LNG  volumes  under  long-term  contracts 
can  protect  against  price  volatility  and  provide  access  to  lower  prices,  bringing  EU 
prices  closer  to  world  market  prices.  Protecting  EU  buyers  against  price  volatility  of 
fossil fuels could lead to a significant short-term reduction in retail prices. 

Action 4: Energy efficiency – delivering energy savings 

Energy efficiency is a key contributor for affordable energy in industry and households, and 
for industrial competitiveness. It limits the impact of high, volatile energy prices on consumer 
bills.  EU industry has reduced its energy consumption by approximately 20% since 2000, all 
while increasing industrial output. To address the challenges the EU faces, energy efficiency 
solutions  must  be  leveraged.  Fostering  a  single  market  for  energy  efficiency  services  will 
help  Europeans  to  benefit  from  services  that  can  help  them  reduce  their  energy  bills  at  the 
best cost, in particular those that have a high upfront cost.72 An enhanced market for energy 
efficiency  providers  can  help  more  companies  to  get  advice  on  efficient  solutions,  for 
example, for re-using their process heat.  

What 
How 

When 

An energy efficiency market of European dimension 
Through the European Energy Efficiency Financing Coalition, the Commission will 
improve access to capital and provide financial incentives to support market actors who 
provide energy efficiency solutions for businesses.  
The  Commission  will  explore  further  supporting  the  EIB  Group  programme  for 
energy efficiency in SMEs, which has the objective to increase the competitiveness of 
European  SMEs,  promoting  the  adoption  of  energy  efficient  and  renewable  solutions 
and  building  climate  resilience.  The  Commission  will,  in  cooperation  with  the  EIB 
Group, explore setting up an EU guarantee scheme with the objective to double the 
energy efficiency services. A pilot, potentially part of the InvestEU blending operation 
with  LIFE  CET  for  technical  assistance,  is  envisaged  in  2026.  This  will  require 
additional  InvestEU  resources,  to  be  obtained  by  optimising  the  use  of  the  EU 
guarantee  currently  available  in  various  EU  mandates,  including  mandates  from  the 
previous programming period.   
First  blueprint  for  a  guarantee  scheme  in  Q4  2025.  Launch  of  the  partnership  in  Q3 
2025. 
Assessment  of  an  EU-wide  market  for  an  energy  savings  certification  scheme  by  Q4 
2025. 

72  EU  funding  for  energy  efficiency  measures  in  housing,  enterprises  and  public  infrastructure  through  the 
European  Regional  Development  Fund  (ERDF)  and  Cohesion  Policy  (the  allocation  under  the  current  MFF) 
amounted  EUR  4.9  billion  for  smart  energy  systems,  EUR  8.9  billion  for  renewable  energy  and  EUR  21.8 
billion for energy. 

18 

 
 
Impact 

Increasing  the  offer  of  financing  solutions  for  energy  efficiency  products.  This  will 
happen through energy service company (ESCO)73 services, with the aim of doubling 
the ESCO market to up to EUR 4-6 billion per year, possibly allowing consumers to 
generate savings in the range of 25-30% for building renovations and up to 70-80%74 in 
public lighting cutting energy bills. 

Secondly,  energy  efficient  products  lower  energy  bills  immediately.  However,  the  many 
non-compliant products imported from non-EU countries damage the competitiveness of EU 
suppliers and reduce the benefits for citizens and businesses.  

What 

How 

When 
Impact 

Give  consumers  access  to  more  efficient  appliances  and  products  with  longer 
lifetimes 
Member States, national market-surveillance and customs authorities should strengthen 
national  market  surveillance  and  enforcement,  including  for  customs  and  online 
marketplaces.  In  line  with  the  e-commerce  Communication,  the  EU  supports  their 
actions and further engagement with online marketplaces.  
The Commission will update EU energy labelling and ecodesign rules, sharing best 
practices, improving IT tools75 and facilitating compliance by operators through clearer 
information  and  guidance.  Member  States  should  consider  using  incentives  for 
consumers to replace their old home appliances with energy-efficient alternatives. 
Immediately 
EU  single  market  rules  for  energy  efficient  appliances  and  products  are  estimated  to 
have brought savings of around EUR 120 billion on energy bills in 2023, estimated 
to rise to about EUR 162 billion in 2030.76 However, an estimated 10% (i.e. over EUR 
10  billion)  are  still  lost  each  year  because  of  the  sale  of  products  that  are  non-
compliant.77  

Pillar II: Completing the Energy Union 

Despite  our  success  in  building  an  interconnected  energy  market,  a  true  Energy  Union 
remains  a  work  in  progress.  As  the  EU  faces  rising  energy  costs  that  place  a  burden  on 
households  and  impede  industrial  competitiveness  –particularly  impacting  energy-intensive 
sectors– the need for a transformative approach is evident. This is why we need to continue 
working  on  longer-term,  structural  measures  that  will  bring  about  the  cleaner  and  cheaper 
energy  that  we  need,  and  that  will  further  bring  us  in  a  genuine  Energy  Union,  including 
increasing  investments  in research  and innovation  for clean energy solutions.  The EU must 
advance  towards  electrification  and  a  fully  integrated  single  market  for  energy,  achieving 
interconnection  goals  and  leveraging  complementarities  among  Member  States  to  create  a 
genuine Energy Union that benefits all. 

This  Action  Plan  is  the  first  stepping  stone  towards  more  interconnection  and  more 
integration.  This  is  why  in  the  coming  months,  the  Commission  will  launch  a  series  of 

73 An Energy Service Company (ESCO) is an organisation that offers energy services including implementing 
energy-efficiency projects or renewable energy projects, frequently on a turn-key basis. 
74 Energy Performance Contracting in the EU – 2020-2021; JRC, 2021  
75 https://eprel.ec.europa.eu/screen/home; https://webgate.ec.europa.eu/single-market-compliance-space/market-
surveillance 
76  Ecodesign  Impact  Accounting  Status  Report  2024,  https://circabc.europa.eu/ui/group/418195ae-4919-45fa-
a959-3b695c9aab28/library/b29b3be3-8085-4e2f-8095-74ad98d9166c/details, table 2 and figure 2. 
77 Commission Communication on Ecodesign and Energy Labelling Working Plan 2022-24 (2022/C 182/01) 

19 

 
 
initiatives aiming at strengthening the governance of the Energy Union, roll out clean energy, 
improve our security of supply, and reduce the bills of citizens and businesses. 

Action 5: Completing the Energy Union  

Building  upon the success  of the REPowerEU Plan, which boosted clean power generation 
and diversified energy supplies, a new Electrification Action Plan (Q1 2026) and a Heating 
and  Cooling  Strategy  (Q1  2026)  will  further  support  these  objectives.  Ambitious 
electrification  of  the  energy  system  and  expanding  clean  generation  sources  will  increase 
energy efficiency of the energy sector as a whole, help decarbonise industrial, mobility and 
heating  and  cooling  sectors  and  support  the  uptake  of  clean  and  domestic  energy 
production.  By  2030,  these  initiatives  will  reduce  our  reliance  on  fossil  fuels,  potentially 
saving billions annually. Tax credits for industrial electrification can promote electrification 
and  help  EU  industry  become  more  competitive  by  supporting  the  affordability  of  such 
equipment, increasing sales and encouraging consumer adoption. 

Digitalisation is  another source of savings for consumers, but  also  a potential vulnerability. 
The  Commission  will  adopt  a  Strategic  Roadmap  for  Digitalisation  and  Artificial 
Intelligence  (AI)  for  the  Energy  Sector  in  2026  to  accelerate  the  rollout  of  European  AI 
solutions  in  areas  such  as  electricity  grid  optimisation,  energy  efficiency  in  buildings  and 
industry,  and  demand-side  flexibility.  Additionally,  it  will  foster  AI-driven  research  and 
innovation by connecting start-ups with energy companies while ensuring robust safeguards 
for cybersecurity, data privacy and safety, The Commission will also examine the increasing 
energy consumption of data centres78,79 and promote their sustainable integration into the 
energy system. Data centres could increase strain  on the energy system and drive upenergy 
prices  ,  especially  considering  data  centres’  capacity  to  outbid  other  energy  consumers  for 
access to energy.  

At the same time, the EU’s Strategic Energy Technology Plan (SET Plan) helps addressing 
the current fragmentation in the EU’s Research & Innovation portfolios for clean energy and 
electrification.  Efforts  still  need  to  be  intensified  to  reach  the  EU  public  and  private 
expenditure  target  of  3%  of  GDP.80,81  The  Commission  will  foster  innovation,  notably 
through coordination with Member States via the SET Plan Steering Group established by the 
Net-Zero Industry Act.82 In addition, to support fusion as an innovative, decarbonised energy 
source for the future, a Fusion Strategy will be proposed, including the creation of a Public-
Private Partnership (PPP) to accelerate commercialisation. 

To meet its energy and climate targets, the EU needs over EUR 570 billion annually between 
2021 and 2030 and EUR 690 billion annually from 2031to 2040 for investments in renewable 
energy,  including  solar,  wind  and  biomass,  energy  efficiency  and  grid  capacity.  The 
Commission  will  also  assess  investment  needs  in  nuclear  energy83  and  foster  investment  in 
next-generation  clean  energy  technologies,  like  nuclear  fusion,  enhanced  geothermal  and 
solid-state batteries,  as  well as into existing capacities such as for refurbishment. While the 
bulk  of investments  needs to  come from  private capital  – public funding needs to  be better 

78 Digital infrastructure accounts for around 3.5% of electricity use in the EU, with data centres responsible for 
about 70%. Energy consumption in data centres and broadband communication networks in the EU; JRC, 2024 
79 Why European data centres are set for major growth; Morgan Stanley & Co., July 2024 
80 European Council conclusions of 23 March 2023 (EUCO 4/23)  
81 Commission communication on SET Plan revision (COM(2023) 634 final) 
82 Net-Zero Industry Act Regulation (EU) 2024/1735 
83 https://ec.europa.eu/economy_finance/recovery-and-resilience-scoreboard/green.html  

20 

 
 
targeted  to  leverage  private  investments  by  de-risking  strategic  projects  notably  through 
guarantee  and  equity  instruments.  The  Commission  will  tackle  the  investment  gap  and 
mobilise private capital for the energy transition with a Clean Energy Investment Strategy 
and will present an updated Nuclear Illustrative Programme (PINC). 

Above  all,  the  completion  of  a  genuine  Energy  Union  requires  a  fully  integrated  energy 
market,  with  a  cohesive  governance  framework  that  aligns  national  and  EU-level 
objectives and ensures that decisions of cross-border and EU relevance are taken at the right 
level. To this end, the Commission will issue a White Paper on deeper electricity market 
integration by early 2026. 

In  addition,  the  National  Energy  and  Climate  Plans  (NECP) must  evolve  into  strategic 
investment  plans that foster investment  predictability, consumer confidence, innovation  and 
market  growth  for  clean  technologies.    The  Commission  will  propose  a  revision  of  the 
Governance  Regulation  to  simplify,  strengthen  and  modernise  the  Governance  of  the 
Energy  Union  and  Climate  Action84  to  prepare  Europe  for  the  post-2030  energy  and 
climate  policy  framework. In  addition,  regional  initiatives  like  the  Trans-Mediterranean 
Energy  and  Clean  Tech  Cooperation  Initiative  could  play  a  role  in  supporting  clean  tech 
manufacturing. 

Energy  prices  can  differ  considerably  between  Member  States.  To  enhance  coordination 
across  the  Energy  Union  and  strengthen  governance  of  the  electricity  system,  the 
Commission will set up an Energy Union Task Force. The Task Force, which will consist of 
high-level  representatives  from  the  Commission,  relevant  EU  bodies,  Member  States  and 
stakeholders  as  needed,  will  examine  and  identify  technical  or  regulatory  adjustments,  and 
will regularly report to the President of the Commission, the European Council, the Energy 
Council and the European Parliament. 

To support this work, the Commission will enhance its focus on assessing the implications 
of relevant initiatives on the affordability of energy for households and businesses. The 
outcome  of  the  relevant  analyses  –involving  whenever  possible  external  experts–  will  be 
appropriately  reflected  in  impact  assessments  on  new  legislative  initiatives  and  reviews  of 
existing legislation. It will complement the information the Commission regularly publishes 
on  the  impact  of  its  initiatives  through  various  reports  as  the  State  of  the  Energy  Union 
Report85 and the reports on energy prices and costs.86 

What 
How 

A complete Energy Union 
The Commission will: 

- 
- 
- 
- 

- 

launch an Energy Union Task Force; 
publish a White Paper on deeper electricity market integration; 
revise the Governance Regulation of the Energy Union; 
present  a  Clean  Energy  Investment  Strategy,  an  updated  Nuclear 
Illustrative Programme (PINC) and a Fusion Strategy; 
put  forward  an  Electrification  Action  Plan,  a  Strategic  Roadmap  for 
Digitalisation  and  AI  for  the  Energy  Sector,  and  a  Heating  &  Cooling 
Strategy. 

84  Governance of the Energy Union and Climate Action Regulation (EU) 2018/1999 
85 For example, the State of the Energy Union Report 2024 (COM(2024) 404 final) 
86 Energy prices and costs in Europe - European Commission 

21 

 
 
When 

Impact 

2025: Energy Union Task Force, Clean Energy Investment Strategy and PINC.  
Until mid-2027 for the other initiatives. 
Deeper  electricity  market  integration  through  the  launch  of  a  dialogue  on  the  future 
evolution of the market and creation of an Energy Union Task Force.  
Prevent sharp increases of system costs up to EUR 103 billion by 2040 if no action 
is taken.87 
Boost  investment  and  reduce  costs  by  derisking  capital,  i.e.  reducing  the  potential 
risks  associated  with  investments,  easing  administrative  burden  for  planning  and 
reporting,  and  improving  Member  State  coordination  in  policy  setting,  ensuring 
investment certainty for 2040 making the NECPs true investment plans.  
Accelerate  electrification  by  40% 
the 
electrification of heat, transport and hydrogen sectors can bring annual energy system 
cost savings of EUR 32 billion in 2030.89 EV bidirectional charging alone could save 
EUR 9.7 billion.90  
Enhance heating and cooling efficiency by scaling up heat recovery, reuse, and heat 
pump  deployment.  Expanding  waste  heat  recovery  in  industrial  processes  and  energy 
services can improve system efficiency and cut costs. Wider heat pump adoption and 
better home efficiency could reduce fossil fuel import spending by  EUR 60 billion 
by 2030, while easing demand on other energy carriers and stabilise prices.  
Leverage digitalisation to cut power sector costs,91 boosting efficiency with estimated 
savings  of  5%  in  operations  and  maintenance,  5%  in  electricity  output  and  5%  in 
network losses.92  

leveraging  flexibility  from 

in  203088 

Pillar III: Attracting investment and ensuring delivery 

A genuine Energy Union based on homegrown clean and affordable energy for all European 
consumers requires substantial investment over the next decade and a robust governance. A 
strong political leadership and commitment and an inclusive engagement of all the actors of 
the energy value chain are necessary to swiftly deliver together on this Action Plan.  

Action 6: Establishing a tripartite contract for affordable energy for Europe’s industry  

Growing market uncertainty can create significant challenges for project developers and can 
delay or deter investments. To counteract this, governments, energy producers, and energy-
consuming  industries  can  create  together  a  favourable  investment  climate  for  an  affordable 
and  sustainable  energy  system  and  a  competitive  industrial  sector,  while  ensuring  the 
retention and creation of quality jobs, as emphasised in the Antwerp Declaration.   

87 Redispatch and Congestion Management; Joint Research Centre, May 2024 
88  As of 2024, electricity accounts for approximately 23% of the European Union's final energy consumption. 
32-33%  by  2030  is  based  on  energy  system  modelling  using  PRIMES  and  POTEnCIA.  The  final  energy 
consumption  used  to  derive  the  range  corresponds  to  Eurostat  definitions  (nrg_ind_fecf),  i.e.  incl.  industry, 
transport,  households,  services,  agriculture  and  ambient  heat  from  heat  pumps,  and  excluding  international 
aviation and maritime bunkers. 
89 Mission Solar 2040: Europe’s Flexibility Revolution; SolarPower Europe, June 2024 
90 Potential of a full EV-power-system-integration in Europe; T&E conducted by Fraunhofer ISE & ISI, October 
2024 
91 Implications of digitalisation on future  electricity market design; Oxford Institute for Energy  Studies, April 
2023 
92 Strategic analysis and development plan design on digital transformation in the energy industry; Liu & Lu, 
2021 

22 

 
 
❖  Clean-energy producers need scale and certainty of demand to ensure long-term 
planning,  which  helps  reduce  risks  for  investors  and  project  costs.  This  certainty 
would  benefit  also  manufacturers  in  the  supply  chain,  for  example  producers  of 
substations  or  cables  for  grid  projects,  allowing  them  to  invest  into  new 
manufacturing  capacities  in  Europe  and  offer  lower  prices.  That  would  enable,  for 
example, large-scale solar or offshore wind project developers to secure supply chains 
and buy at lower costs. 

❖  Energy-consuming  industry,  and  in  particular  energy-intensive  industry,  needs 
certainty on energy supply and prices to plan their production and take investment 
decisions  that  will  determine  their  transformation.  For  example,  the  steel  industry 
needs long-term certainty on electricity supply and prices to invest in electrification of 
production  processes.  In  return,  the  energy-intensive  industry  can  provide  offtake 
certainty to energy producers by engaging in long-term contracts. 

❖  The  EU  and  Member  States’  governments  can  lower  risks  through  stable 
regulatory  frameworks  and  measures  to  facilitate  investments.  Bringing  this 
predictability  for  project  developers  and  supply  chains  contributes  to  derisking 
investments  and  lowering  costs  for  businesses  and  households.  This  could  be  done, 
for  example,  by  committing  to  a  longer-term,  reliable  and  granular  timeline  of 
auctions  for  clean  energy  projects  and  relying  on  supportive  tender  designs  that 
reflect  the  Net-Zero  Industry  Act’s  principles  for  resilience,  security  and 
sustainability.  

In  that  regard,  the  experience  of  the  Wind  Charter93  and  the  Solar  Charter94  have 
demonstrated the added value of bringing together institutional and economic actors to make 
decisive steps in building a competitive value chain in key sectors of the clean transition.  

Building on these experiences, a broader Tripartite Contract for Affordable Energy can 
bring  together  these  commitments  and  create  an  investment  climate  that  supports  cost-
effective  energy production,  reliable energy supply,  and long-term economic growth  for  all 
stakeholders.  

93 European Wind Charter 
94 European Solar Charter 

23 

 
 
Figure 4. A Tripartite Contract for affordable energy for Europe’s industry 

What 

How 

A tripartite contract for affordable energy between public sector, including financial 
institutions, clean energy developers and energy-consuming industry. 
A broad tripartite contract will: 

-  bring predictability and scaling for energy generators, who will have a secure 
off-taker for their production, and for energy purchasers, who can benefit from 
affordable and stable energy supply; 
support for the business models of the sector, thanks to the support brought 
by  the  Commission,  the  EIB  and  the  Member  States  that  will  enable  them  to 
derisk investment and grow. 

- 

When 
Impact 

This would include sectoral contracts for certain sectors (e.g. hydrogen, synthetic fuels, 
batteries, offshore wind, solar, grids). 
2025 
Increase  transparency,  visibility  and  certainty  for  producers  and  energy-consuming 
industry, supporting investment decisions and lowering costs and energy prices  

Pillar IV: Being ready for potential energy crises 

The recent energy crisis, the most severe Europe has seen yet, underscored the importance of 
EU-level coordination in managing price spikes in the internal market. To increase resilience 
in the face of any possible future energy crisis, Member States need tools for effective action 
and  the  security  of  supply  framework  needs  to  be  strengthened,  incorporating  the  lessons 
learned from recent developments.  

Action 7: Ensuring security of supply for price stability 

Stable  energy  supplies  are  critical  for  economic  resilience,  continued  access  to  affordable 
energy  and  avoiding  extreme  price  volatility.  Disruptions  to  energy  supplies  caused  by 
geopolitical  tensions,  cyberattacks,  deliberate  attacks  or  extreme  weather  events  threaten 

24 

                                                                                                                                                                                                                                                                                                                                                                                        
 
affordability. A new regulatory framework is necessary to increase the resilience of the EU’s 
energy system and contain energy prices volatility.  

What 

How 

When 
Impact 

Contributing  to  price  stability  through  an  energy  security  framework  that  takes 
into account what we learned during the energy crisis  
The Commission will put forward a legislative proposal for a revision of the current EU 
energy security regulatory framework  
Early 2026 
Better  availability  of  energy  supplies  at  all  time  and  better  preparedness  for  supply 
stress periods can help reduce price volatility and lower prices 

Action 8:  Price crises preparedness 

The  Electricity  Directive  and  the  Gas  Directive  contain  provisions  allowing  the  Council  to 
declare a price crisis following a proposal by the Commission when certain excptional crisis 
conditions are met. In these situations, demand reduction in certain hours plays a central role 
in  mitigating  the  effects  of  energy  crises.  Also  outside  of  crisis  periods,  schemes  to  lower 
peak demand whereby consumers are paid by their supplier to reduce consumption in 
certain  hours  can  be  designed  and  activated  already  today.  Experience  in  several  Member 
States shows that during exceptional periods of system stress and high prices, consumers are 
willing to voluntarily reduce demand.  

What 
How 

When 
Impact 

Avoiding price peaks during energy crises 
Commission guidance to Member States on the development and implementation of 
schemes  to  lower  peak  demand  by  introducing  remuneration  incentives  for 
consumers. Transmission system operators (TSOs) to introduce and activate measures 
to lower energy demand at peak demand hours and shift demand to a later point.  
Ongoing and to be deployed during price spikes/periods of system stress 
Lower  prices  during  periods  of  peak  energy  demand,  lowering  price  volatility  and 
keeping final energy bills in check 

Second,  for  cases  where  network  bottlenecks  or  congestion  severely  hinder  energy  flows, 
close cooperation with TSOs and national regulatory authorities is necessary to temporarily 
increase  available  cross-border  interconnection  capacities  in  certain  situations  (e.g. 
regional price crisis as seen in 2024 in Southeast Europe), ensuring that energy reaches areas 
most  affected.  Maintenance  outages  need  to  be  properly  coordinated  within  the internal 
energy market so that unnecessary impacts of such outages on neighbouring Member States 
are avoided. 

What 
How 

When 
Impact 

Increased cross-border access to cheap electricity 
Work with TSOs and national regulatory authorities to ensure temporary increases of 
available  cross-border  capacities  in  certain  situations  and  proper  coordination  and 
planning  of  maintenance  outages  across  borders  to  avoid  restrictions  in  the  flow  of 
electricity 
When necessary, e.g. in certain regional price crises 
Ensuring  that  cross-border  trade  of  electricity  is  maximised  in  crisis  situations  to 
mitigate local price spikes in particular markets 

Finally, as natural gas is overall expected to remain the main price-setter for electricity in the 
next years in the EU, the Commission stands ready to support Member States when designing 
State aid measures, to empower them to address extreme price spikes and exceptional price 

25 

 
environments  to  decouple the translation  of high  gas prices into electricity prices, based on 
proven models in emergency situations. 

5.  CONCLUSIONS AND WAY FORWARD  

The Action Plan for Affordable Energy sets out eight concrete short-term measures to deliver 
a genuine Energy Union for  competitiveness,  affordability, security  and sustainability. 
Delivering in this transformative Action Plan will require the involvement of all actors: (i) the 
coordination  of  the  EU  with  the  instrumental  support  of  the  European  Parliament  and 
Council, to ensure an effective and pragmatic legislative framework; (ii) the firm cooperation 
of Member States to implement the actions on the ground and ensure the full potential of the 
plan  is  delivered  for  citizens;  (iii)  the  active  inclusion  of  stakeholders:  our  industry  and 
businesses,  our  workers,  our  innovators  and  our  citizens;  and  (iv)  the  involvement  at  the 
highest political level through an Energy Union Task Force. 

The Commission will implement, monitor and report on the progress  towards delivering 
the Action Plan in future State of the Energy Union reports. The Commission will regularly 
inform  the  European  Parliament  and  the  Energy  Council  of  ministers  of  the  progress  and 
discuss impacts. 

The  challenges  we  face  are  significant.  But  so  are  our  strengths.  Together,  we  have  built 
resilient  grids  and  the  most  integrated  energy  network  in  the  world.  We  have  nurtured  a 
strong  manufacturing  base,  a  highly  skilled  workforce,  advanced  technologies  and  a  strong 
regulatory  framework.  We  have  held  firm  and  stepped  forward  on  our  path  to 
decarbonisation,  decoupling  our  economic  growth  from  our  CO2  emissions  and  showing 
leadership in the global energy transition. These strengths make it possible to address the 
challenges that Europe currently faces. 

The reasons why we take on these challenges are clear. Energy is at the foundation of our 
economy and of our society. It represents a small fraction of our GDP expenditure,95,96 but it 
drives the entire economy. It moves the trains that transport us, it warms the houses we live 
in, and it activates the machines that make the goods we use every day. It is also one of the 
foundations of our EU, from a time when coal and steel were the pillars of the reconstruction 
of  Europe  –  it  has  supported  the  growth  of  our  economy  and  improved  the  daily  lives  of 
Europeans ever since.  

The  generation  of  energy  and  the  integration  of  our  energy  markets  has  always  been 
fundamental  for  European  unity.  From  the  European  Coal  and  Steel  Community  to  the 
development of the Energy Union, energy has been a  key to our economic stability  and a 
driver  of  EU  integration.  Guided  by  the  Competitiveness  Compass,  and  supporting  the 
Clean Industrial Deal, this Action Plan for Affordable Energy will enable us to build on 
our strengths, allowing us to unlock the true value of our Energy Union and to reaffirm the 
EU’s commitment to  an inclusive energy transition  where no individual or community is 
left behind. 

95 EU governments’ expenditute on energy represents only 1.1% of our GDP expenditure  
(https://ec.europa.eu/eurostat/statistics-
explained/index.php?title=Government_expenditure_on_economic_affairs) 
96 On average in 2000-2021, gross imports of fossil fuels represented about 20% of total merchandise imports, 
equivalent to 2.8% of the EU’s GDP (based on Eurostat’s trade data for CN code 27). Impact Assessment report 
accompanying the Commission Communication on Europe’s 2040 climate target (SWD(2024) 63 final, part 3/5) 

26 

 
 
ANNEX I: SUMMARY OF ACTIONS AND TIMELINE  

What  

When  

By whom  

Pillar I: Lowering energy costs 

Action 1: Making electricity bills more affordable  
More efficient network charges to reduce energy 
system costsMore efficient network charges to reduce 
energy system costs 
Lower taxation of electricity and removal of non-
energy cost components from bills 
Enable consumers to swich to cheaper energy suppliers 
while tackling energy poverty  
Action 2: Bring down the cost of electricity supply  
Decouple retail electricity bills from high and volatile 
gas prices  

Reduce permitting times for an accelerated energy 
transition  

Accelerate the expansion, modernisation and 
digitalisation of grids 
Increase system flexibility through deployment of 
storage and demand response 

Q2 2025   

EC, MSs, NRAs  

From adoption 
Q4 2025 (Rec.) 
Q3 2025  

MSs, with EC 
support  
EC, MSs, NRAs  

EC, EIB, MSs  

EC, MSs, national 
competent 
authorities  
EC, MSs, TSOs  

EC, MSs  

Q2 2025 (EIB) 
and Q4 2025 (CfD 
Guidance)  
From adoption and 
throughout 2025-
2026 
Q1 2026  

From adoption 
Q2 2025 (State aid 
fwk) 
Q1 2026 (NC DR)  
Q4 2025 

Guidance on promoting remuneration of flexibility in 
retail contracts 
Action 3: Improve gas markets for fair energy prices   
Ensure fair competition in gas markets  

Q4 2025    

Harness EU purchasing power to get a better deal from 
imported natural gas   

Q1-Q2 2025   

Action 4: Energy efficiency: delivering energy savings  
An efficiency market of European dimension  

Q3-Q4 2025   

Give consumers access to more efficient appliances and 
products with longer lifetimes  

From adoption  

27 

EC, MSs 

EC, MSs, ACER, 
ESMA, NRAs  
EC with  
international 
partners   

EC, EIB, financial 
institutions, EE 
industries   
EC, MSs, national 
market surveillance 
and customs 
authorities   

 
 
 
 
Pillar II: Building a genuine Energy Union  

Action 5: Completing the Energy Union  
Launch an Energy Union Task Force  

2025 

Tackle the investment gap and mobilise private capital  Q2 2025 
Building a more integrated energy market   

Providing investment certainty and a simplified 
governance regime for a robust Energy Union  
Ramping up electrification  
Increase digitalisation and use of AI in the energy 
sector  
Decarbonisation and integrating the H&C sector 
enabling gas replacement 

2026 to mid-2027 

EC, MS 
EC 

EC, MS 

EC, MSs, relevant 
EU bodies, experts 
EC, EIB, InvestEU 
EC, MSs, EP and 
stakeholder 
EC  

Pillar III: Attracting investment and ensuring delivery  

Action 6: A tripartite contract for affordable energy for Europe’s industry  
A tripartite contract for affordable energy  

2025    

EC, MSs, EIB, 
energy producers & 
industry   

Pillar IV: Being ready for potential energy crises 

Action 7: Security of supply for price stability   
Contributing to price stability through a fit-for-purpose 
energy security framework  
Action 8: Price crisis preparedness    
Avoiding price peaks during energy crises   

Early 2026  

EC  

During energy 
crises 

EC, MSs, TSOs   

Increased cross-border access to affordable electricity    During energy 

EC, NRAs, TSOs  

crises  

28