EU aims to produce more clean energy, electrify to bring down energy prices

The EU aims to produce more clean energy and electrify its energy mix to bring down prices, European Commission officials said Feb. 26 presenting the Clean Industrial Deal and Action Plan for Affordable Energy.

Focus will be on relaxing EU state aid rules for instance for nuclear, accelerating renewables by faster permitting, lower power taxes, efforts to decouple power from gas prices and efficiency savings from more interconnectors as well as an overall electrification of energy consumption targeting a 32%-33% electricity share in 2030 from around 23% currently.

"We will look at how to decouple electricity from gas prices, using different financial instruments like CFDs and PPAs and work with the EIB," energy commissioner Dan Jorgensen said at a news conference.

The Commission will support member states when designing state aid measures that address extreme price spikes and exceptional price environments to decouple the translation of high gas prices into electricity prices, based on proven models in emergency situations, it said in a 28-page document.

Amid some overlap, the Clean Industrial Deal said the Commission would provide guidance on how to design CFDs, including their potential combination with PPAs, in line with state aid rules, which will be paired with the adoption of new rules on cross-border forward capacity allocation by 2026.

Jorgensen also said EU member states needed to deploy renewables far" faster than today and make energy systems better connected", calling for a doubling of the utilization of existing interconnectors as well as doubling the EU's internal interconnector capacity.

According to the EC, electricity markets integration already benefits EU consumers by Eur34 billion/year.

To make electricity more affordable, the Commission will tackle all three components of energy bills, namely network and system costs, taxes and levies and supply costs, it said announcing a review of taxation guidelines.

Implementation of the action plan is estimated to achieve annual fossil fuel import savings of around Eur130 billion in 2030, the EC said.

Without the energy transition, the EU's fossil fuel import bill in 2025 would be Eur45 billion higher than in 2019, while the document also noted a record Eur604 billion EU import fuel bill in 2022.

Future savings estimates are based on electrification and energy efficiency efforts (25%), replacing fossil fuels in electricity generation (50%) and smart grid infrastructure and system flexibility (25%), it said.

For this to be achieved, an Electrification Action Plan and a Heating and Cooling Strategy will be published in Q1 2026. Improving system flexibility was another focus with the Commission to revise state aid frameworks in Q2 2025 and set new rules for demand response in Q1 2026.

Clean Industrial Deal

Earlier presenting the Clean Industrial Deal, Teresa Ribera -- First Executive Vice-President of the EC for Clean, Just and Competitive Transition -- said the new roadmap was designed to "make our industry great again" by improving investor confidence, while not undermining green deal targets.

EU Commissioner for Climate, Net-Zero and Clean Growth Wopke Hoekstra mentioned lower power taxes, more renewables and electrification with the EC also set to allow member states to subsidize clean energy by relaxing state aid rules, setting new criteria and a preference for EU suppliers in procurement.

"The EU is at a crossroads, but the path is clear towards a cleaner, more competitive, self-sufficient future," Hoekstra said.

Meanwhile, the EC's industrial strategy commissioner Stephane Sejourne said nuclear was key to this with the plan improving the status of the technology, which will help "drive down cost of energy and produce more clean energy."

"The Commission will also assess investment needs in nuclear energy 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," it said announcing an updated Nuclear Illustrative Programme (PINC) after more EU member states indicated plans for new nuclear projects.

EU state aid guidance with regards to nuclear where to make sure there is a level playing field, the officials said.

"Fully recognizing the Member States' right to decide on the energy mix, the Commission will assess the state aid for nuclear supply chains and technologies," it said in the Clean Industrial Deal after a leaked draft did not mention nuclear.

"Europe's ability to compete, power, and defend itself is becoming an absolute imperative given the unprecedented geopolitical developments," said the head of electricity sector association Eurelectric Kristian Ruby.

Power prices in markets with a low share of fossil-fueled power, such as France, Spain or the Nordics, are lower than those in markets with a relatively high share such as Germany or Italy.

French power for 2026 delivery traded Feb. 26 on EEX just below Eur63/MWh ($66/MWh) compared to Eur105/MWh in Italy or Eur83/MWh in Germany.

Platts, a unit of S&P Global Commodity Insights, pegged UK Cal 2026 power on Feb. 25 at GBP75.71/MWh ($96/MWh).