As the European Commission prepares its Accelerate EU plan, Eurelectric sets out practical solutions to reduce electricity prices in the short term – without undermining long-term investment or the integrity of the internal energy market.
Balancing affordability and investment
On 22 April, the European Commission is expected to present a communication with a toolbox of measures to tackle high electricity bills in the wake of the current energy crisis.
The much anticipated “Accelerate EU” plan will aim at reducing energy costs and short-term price volatility while preserving long-term investment signals.
Striking this balance will be crucial. Europe needs to provide immediate relief to consumers and industry. At the same time, it needs to attract investment in clean energy, grids and flexibility if it wants to avoid future crises. Pushing electrification is the only way out of the fossil fuel dependency, which has already cost Europe a €22 billion increase in imports since the closure of the Strait of Hormuz.
However, not all proposed measures achieve both objectives. Past interventions such as gas price caps or broad subsidies, including those implemented in Iberia in 2022, have shown they can be distortive to the internal market and deliver limited benefits to consumers.
What can bring immediate relief
Looking across the different components of electricity bills, Eurelectric identifies several targeted measures that can lower costs quickly without undermining market functioning.
- Taxes and levies: member states can lower VAT in electricity, shift fiscal burdens onto fossil fuels to incentivise electrification or exempt vulnerable consumers. Removing non-energy-related levies and cross-subsidies would also have a direct impact.
- Network tariffs: regulators can incentivise consumers to optimise capacity use and shift demand away from peak periods.
- Carbon costs: the European Commission’s proposed €30 billion ETS Investment Booster (funded by 400 million EU allowances) could support industrial consumers. A targeted adjustment of the Market Stability Reserve and related parameters would help industry while preserving the ETS as a credible investment signal. More efficient use of ETS revenues (over €43 billion raised last year alone) is also critical to accelerate decarbonisation and industrial transformation.
- Energy costs: state aid tools, such as the industrial price support proposed in the Clean Industrial State Aid Framework (CISAF), alongside unlocking demand-side flexibility, can provide targeted relief.
Beyond immediate fixes, structural solutions include:
- Scaling up electrification, including institutionalising the Industrial Decarbonisation Bank pilot auction with a stronger, dedicated budget.
- Expanding long-term contracts such as Power Purchase Agreements (PPAs) and Contracts for Difference (CfDs) to stabilise retail prices.
- Accelerating the deployment of clean, homegrown electricity generation, flexibility and storage to reduce Europe’s exposure to fossil fuel price volatility.
As the European Commission finalises its Accelerate EU plan, the focus should be on solutions that both lower bills today and secure Europe’s clean energy future.