The European Commission has adopted an Electrification Action Plan setting an indicative EU target for electricity to account for 46% of final energy consumption by 2040, subject to an impact assessment as part of the Energy Union Package in the fourth quarter of 2026. The plan, published on 17 July 2026, also encourages Member States to reduce the ratio of electricity prices to gas prices to a maximum of 2.5 for households and 2 for industry by 2030.
The Commission argues that electrification could cut EU gas imports by over 70% and crude oil imports by over 40% by 2040, saving up to EUR 260 billion per year on import bills, and notes that the EU has spent over EUR 50 billion extra on fossil fuel imports since the onset of the Middle East crisis. The plan estimates that electrification would lower electricity generation costs by about 20% and reduce CO₂ emissions by more than 2,000 megatonnes in 2040 compared to current levels.
Alongside the action plan, the Commission adopted a legislative proposal on network charges designed to incentivise electrification, flexible grid use, storage, and smart meter deployment. The Commission also announced it will propose a new network code and revise existing codes on generator and demand connection in 2026 to better integrate battery storage, thermal storage, geothermal, electric vehicles, and heat pumps.
The European Investment Bank Group intends to provide over EUR 75 billion over the next three years for large-scale electrification, grids, storage, and flexibility projects. The plan references the Tripartite Agreement on Energy Storage (2026-2028), which pledges 30-35 GW of stationary storage, while noting that the EU needs 200 GW by 2030 and 500 GW by 2040, up from around 55 GW in 2026.
Policy orientations and trade-offs The 46% electrification target, while indicative, signals a strong push by the Commission to accelerate the shift from fossil fuels to electricity. The proposed price ratio caps would make electricity relatively cheaper compared to gas, encouraging households and industry to switch to electric heating, transport, and industrial processes. However, achieving these ratios may require Member States to adjust taxes, levies, and network charges, potentially reducing revenues from energy taxes or requiring compensation for grid operators.
Impact on stakeholders - EU consumers: Lower electricity-to-gas price ratios could reduce household energy bills if electricity prices fall relative to gas, but the impact depends on national implementation and the pace of electrification. Consumers may face upfront costs for heat pumps, electric vehicles, and home upgrades. - EU industry: Industrial users could benefit from lower electricity costs and reduced exposure to volatile fossil fuel prices, but energy-intensive sectors may face challenges adapting to new network charges and grid connection requirements. - EU grid operators and utilities: The network charge proposal and grid code revisions will require significant investment in grid modernisation, smart meters, and flexibility services. Operators may face regulatory pressure to accommodate distributed generation and storage. - EU taxpayers and EIB: The EIB's EUR 75 billion commitment over three years represents a major public financing push, which could strain EU budgets if not matched by private investment. Taxpayers may bear the risk of projects that do not achieve expected returns.
Institutional follow-up The Commission will conduct an impact assessment as part of the Energy Union Package in Q4 2026 to refine the 46% target. The legislative proposal on network charges will now be examined by the European Parliament and the Council. The revised grid codes are expected to be proposed later in 2026. Member States are encouraged to submit national electrification plans aligning with the price ratio targets by 2030.