Energy Consumers

Throughout our daily lives we often take electricity for granted. Whether it is to deliver online education throughout a global pandemic, charge your smartphone to keep in touch with family, or simply keep the lights on, electricity is there. As we continue to decarbonise, consumers will become key players for Europe’s energy transition and their role is rapidly evolving.

Consumers are not passive recipients of energy anymore. In the past, we used to rely on massive centralised power plants delivering electricity to our homes and offices. That has changed. Today renewables scatter our countryside, households and shopping centres have solar panels on their roofs, heating and road transport is being electrified. EV owners not only consume power but can also feed it back into the grid at times of peak demand or store electricity in their cars’ battery when power supply is abundant. Prosumers now have smart thermostats that enable them to react to price signals and adjust their electricity usage, providing flexibility and earning from it.

When looking at the future, Eurelectric’s study Decarbonisation Speedways shows that by 2050, Europe will see around 251 million heat pumps and 237 million EVs – roughly twenty-fold increase from today. Consumers’ active engagement means an effective evolution towards a more innovative, decentralised and decarbonised power system.

But are consumers properly involved in our energy transition today? Are people and companies fully aware of the opportunities and benefits of a decarbonised and flexible energy system?

At Eurelectric, we seek to answer these questions by empowering and educating consumers to play a more active role in our energy transition. But who do we mean by consumers?

Who are electricity consumers?

Electricity consumers can be divided into three different categories:

1. Businesses
2. Households,
3. Vulnerable and energy-poor consumers.

Businesses

Commercial entities are an important faction to consider when discussing electricity users as they consume a significant amount of power. According to Eurostat, their production activities account for 75% of the net domestic energy use in Europe, which translates to around 45.5 million terajoules (Tj). This substantial consumption is driven primarily by industries relying on electricity, gas and steam for their production processes. As large-scale customers, businesses have the potential to impact the market through their consumption patterns and their capacity to invest in energy-efficient machinery, optimised production processes, and renewable sources.

Within this group, energy intensives deserve special mention. These are companies that utilise power together with other energy carriers 24/7 to run their operations and produce commodities including cement, aluminium, silicon, chemicals, ceramics and so on. These businesses rely heavily on fossil fuels today but will need to find decarbonised alternatives to function. The potential to electrify them is huge.

According to Eurelectric’s latest Power Barometer, the electrification rate of industrial consumers in Europe is stagnating at 33%, whereas nearly 60% to 90% of industry could be electrified. Most notably, process heating, which is responsible for 75% of all industrial emissions, could be directly powered by electricity with existing technologies for various temperature ranges. These include electric boilers, arc furnaces, heat pumps, induction heating, plasma torches and many more. However, as of today, only 4% of these processes are electrified.

“To get the balance between competitiveness and decarbonisation right, energy intensives should benefit from clear incentives to electrify” – said Eurelectric’s Secretary General Kristian Ruby, underlining that a business case for sustained investments in the electricity system is paramount. “A well-functioning market with long-term investment signals, incentives to reinforce infrastructure and lower taxes on electricity are no-regrets that can be implemented immediately.”

In 2024, for the first time, Eurelectric came together with energy intensive representatives CEFIC and European Aluminium in the Antwerp Dialogues to discuss how to strengthen Europe’s competitiveness and electrify industry.

The group – gathering more than ten sector associations – found consensus around six key actions to alleviate pressure on Europe’s industrial base while maintaining the business case for decarbonised electrification:

1. Facilitate access to power purchase agreements (PPAs) and long-term contracting for industrial consumers,
2. Boost financing of low-carbon technologies,
3. Level out electricity taxes and levies,
4. Develop flexibility,
5. Address infrastructure bottlenecks and (6) create high quality jobs.

You can learn more about our advocacy by reading the Antwerp Dialogues conclusions.

Households

Households represent a diverse group of consumers with varied power needs and consumption patterns. Accounting for just 25% of net domestic electrical power use in Europe, households consume about 16.6 million Tj. Over half of this use goes towards residential activities like heating, cooling, and lighting. The remaining portion is used for private transportation and powering electronic devices.

The rise of smart home technologies is revolutionising household energy use. These innovations allow residents to monitor and manage their usage more effectively, employing energy-efficient appliances, smart thermostats, and home power management systems. Such optimisation tools not only lead to significant cost savings but also reduce the environmental impact and improve air quality. Additionally, the growing popularity of rooftop solar panels is further contributing to the decentralisation of the energy system, empowering households to generate their own electricity for their self-consumption, energy sharing, or to sell it to the grid.

While considering households as a whole is crucial, particular focus should be placed on vulnerable and energy-poor consumers.

Vulnerable and energy-poor consumers

These include low-income households and those with limited access to energy resources. Understanding who these consumers are as well as their specific needs is essential for creating an inclusive transition and equitable system. These households often require special attention, targeted policies and programmes primarily aimed at improving affordability of electricity in times of perpetual higher wholesale electricity prices – a social issue that is becoming increasingly significant in the years to come.

These people also needs to experience the benefits of the energy transition. Energy savings through energy efficiency measures, direct access to clean energy sources, or demand flexibility are ways to get this group on board for the energy transition.

It’s impossible to discuss electricity consumers without also talking about the suppliers who provide them with electricity.

Who are the electricity suppliers?

Power suppliers are entities that either purchase electricity from the wholesale market or generate it themselves before selling it to end consumers. They range from large, well-known utilities to smaller, independent firms, all playing a vital role in maintaining the balance between supply and demand.

Their responsibilities go beyond just delivering electricity. The European Commission emphasises the importance of transparency in their operations. Electricity and gas bills issued by these suppliers must be clear and concise, allowing consumers to easily compare offers from different suppliers. This transparency empowers users to make informed decisions and switch suppliers if they find a better deal, fostering a competitive marketplace.

As our energy landscape evolves, so is the product and service offerings of our power suppliers. These are now increasingly adopting innovative business models and digital technologies to better meet the needs of these end-users. For instance, many suppliers now offer online platforms and mobile applications that allow end-users to monitor their power usage, pay bills, and access customer care easily. They also act as intermediaries between energy producers and end-users, negotiate contracts, set prices, and sometimes even provide fixed-rate plans to protect consumers from price fluctuations.

A key precondition to guarantee a wide variety of contract offers is a well-designed competitive retail market.

What are retail markets and how do they work?

The retail energy market is where suppliers sell electricity to businesses and households. As detailed in our related policy area, retails markets differ from wholesale markets, in which electricity is bought and sold between generators, traders, suppliers, and aggregators. Prices in the wholesale market are determined by supply and demand based on the merit order principle and marginal pricing system Thus, ensuring that demand is met efficiently at any given time. Retail prices often include additional costs like network tariffs, charges, and levies.

In retail energy markets power producers, suppliers, and consumers come together to form a dynamic ecosystem crucial for distributing electricity and gas efficiently. These are not just about transactions; they are about fostering competition, spurring innovation, and empowering consumers to make informed decisions about their energy use.

In Europe, the power of choice for the consumer is considered a core principle of the retail markets playground. End-users can select their energy supplier based on various factors such as price, customer care, and power sources, from traditional fossil fuels to clean power options. This freedom of choice drives suppliers to offer better value, ensuring a competitive landscape that benefits everyone.

Technological improvements in services provided by suppliers have made leaps and bounds in recent years to facilitate end-users in such choice. Thanks to modern advancements, online comparison tools and platforms now enable consumers to evaluate different offers and switch suppliers effortlessly. These tools demystify the process, allowing consumers to quickly find the best deals tailored to their needs and preferences.

Recent energy crises have cast a spotlight on the vulnerabilities within the retail energy market. Extreme spikes in wholesale electricity prices have significantly impacted retail prices, hitting lower-income households the hardest as they spend a higher proportion of their income on electricity, amplifying the issue of energy poverty.

Developing strategies that support vulnerable end-users is key. Policy interventions, targeted subsidies, enhanced consumer protections, and direct access to renewables are great examples to mitigate the adverse effects of price volatility on lower-income households. By implementing these measures, we can strive for a fairer and more equitable energy system.

As we move forward, a comprehensive understanding of these markets will be crucial in creating a resilient and inclusive energy landscape for all.

Zooming in: Explaining the electricity bill

Ensuring consumers have a proper grasp of their energy bills is paramount to them gaining a clear picture of their suppliers contract. Every bill has three key components:

• Energy component – the lower the marginal cost of the energy source and the lower the wholesale price, the lower the cost of the energy component. As cheaper clean power is deployed, the energy component is set to decrease.
• Network tariff – determined by national regulatory authorities
• Taxes and levies – determined by each Member State. Currently, taxation policy in Europe still favours gas over electricity, with taxes weighing x1.4 times more in the power bill compared to gas.

Article 18 of the EU Directive on the electricity market reform looks into this in detail, stating that the power bills in Europe are not easy to comprehend for the average energy user. As a result, the EU is pushing for suppliers to present key contract information in a clearer, more concise and easily understandable manner. This initiative should help end-users make better informed decisions as well as promote greater transparency.

What are main barriers to consumers’ active engagement in the energy transition?

Our 2021 Power to People study shows that almost 80% of consumers are not yet actively taking part in the energy transition because many of them don’t know how. There is an awareness gap which must be addressed.

Eurelectric and Accenture identified four barriers that hamper consumer engagement in the energy transition:

• a general lack of awareness regarding customers’ potential,
• insufficient information on the real costs and benefits of low-carbon options,
• difficulties in accessing finance for energy efficiency investments or renewable energy systems,
• concerns about data use and privacy.

How can consumers become more active in the energy transition?

“Most customers are unaware that electric solutions can cut their carbon footprint while saving them money. Stepping up collaboration between the energy ecosystem, governments, financial institutions and customers is critical to closing the yawning information gap that hinders the adoption of carbon neutral, energy efficient, electric solutions.”

Kristian Ruby – Eurelectric’s Secretary General

Speaking of closing the awareness gap, let’s look in detail at a few modern alternatives that consumers can rapidly adopt to decarbonise their energy use, reduce their energy use and ultimately lower their energy bills.

Flexibility

Flexibility is emerging as a crucial strategy to balance the power system by complementing renewables’ variable generation. Eurelectric’s Decarbonisation Speedways study projects that the EU power system will require between 531 and 782 TWh of flexibility by 2050, a volume equivalent to Germany’s annual power production.

Consumers can play a pivotal role in providing flexibility to the system by adjusting their energy use based on grid and price signals. Shifting power use to off-peak periods where cheap renewable generation is abundant enables consumers to benefit from lower rates and significantly cut their energy bills. This behaviour is known as demand side flexibility.

Advanced technologies like programmable thermostats and smart meters are revolutionising energy management, enabling real-time monitoring of end users’ energy use, and making it easier to react to fluctuating prices. Achieving this level of demand side flexibility is a vital contribution to the management of power grids.

All consumers can provide flexibility to different degrees depending on their preferences, abilities, and needs. Households and small businesses can actively participate in energy management by adopting smart electric appliances and assets like heat pumps, electric vehicles, and batteries. Industry and large commercial sites can shift their consumption to lower-priced periods or provide balancing services by adjusting their production schedules.

On the supply side, quickly dispatchable power generation assets can be activated or deactivated to address supply and demand mismatches, while energy storage technologies such as hydro pumped storage and utility-scale batteries will serve as essential pillars for both short and long-term flexibility. Strategically placed electrolysers can also alleviate or eliminate congestion across all voltage levels.
Moving forward, Europe will need to create more incentives to unleash the full potential of demand-side flexibility. A great step would be allowing creating flexibility markets to properly reward flexibility providers.

Solar PV

One of the most impactful ways for end-users to contribute to the decarbonisation of our energy system is by installing solar photovoltaic (PV) systems. These systems allow households to generate their own electricity, reducing reliance on the supply from the grid and lowering their monthly energy bills. The initial investment in solar panels can be significant, but many consumers are finding that the long-term savings and environmental benefits make it a worthwhile endeavour.

Solar PV is clearly gaining popularity as a sustainable solution to the energy crisis a global scale. According to the Decarbonisation Speedways study, solar is expected to dominate energy capacity, representing 55% of the renewable mix and 46% of total capacity. This trend clearly shows that end-users are rapidly adopting this option.

Electric Vehicles (EVs)

As more people switch to electric vehicles (EVs), they not only reduce their carbon footprint but also benefit from lower fuel costs. EVs can be charged during off-peak hours when electricity rates are cheaper, further helping manage energy expenses. Moreover, advancements in smart charging and vehicle-to-grid (V2G) technology enable EV owners to sell excess power back to the grid, providing an additional income stream and enhancing grid stability.

Furthermore, the success of EVs can be witnessed in the European Commission’s Impact Assessment. The transport sector is set to experience the most significant surge in final electricity consumption from 2021 to 2040, driven by the rapid expansion of electric transport. Transport emissions are projected to drop by 69-78% compared to 2015 levels. This substantial reduction is largely attributed to the widespread adoption of electric vehicles for road transport combined with advanced biofuels in maritime, aviation, as stated in our EV explainer.

The ban on internal combustion engines for cars and vans starting in 2035 is a major catalyst for electrification. Similarly, the newly adopted target of a 90% emission reduction by 2040 for heavy-duty vehicles (HDVs) is set to drive significant changes in the transport sector. Backtracking on the promises of the Green Deal is not an option.

Eurelectric is contributing to accelerating e-mobility in Europe through its EVision Business Hub.

Heat Pumps

Heat pumps are gaining popularity as an energy-efficient solution for heating and cooling homes. Unlike traditional system that rely on fossil fuels, heat pumps use electricity to transfer heat, making them more sustainable and up to four times more energy-efficient. With the ability to operate in a wide range of temperatures, heat pumps can significantly reduce energy use and lower utility bills.

As more consumers adopt this technology, they contribute to reducing greenhouse gas emissions coming from heating and support the shift towards a greener energy landscape. However, fostering their adoption requires strong strategic regulatory frameworks such as an Heat Pump Action Plan from the European Commission and public outreach as detailed in this Eurelectric response paper. Effective public engagement and financial incentives are key to demystifying the technology and reducing high upfront costs.

Additional enablers needed to massively deploy heat pumps are:

1. Skilled installers to meet growing demand.
2. Grid modernisation and expansion to ensure heat pumps and other decentralised assets are smoothly connected to the power infrastructure. This will need to be backed by significant investments – as detailed in our Grids for Speed study – in order to enhance grid capacity and accommodate the increased load from electric heating systems.
3. Digitalisation to optimise adoption. Synchronised interfaces with digital platforms can align operations with grid dynamics, boosting energy efficiency and flexibility. This requires standard safety measures and smart grid functionalities to improve grid stability, resilience, and efficiency.

Energy Sharing

Energy sharing is an opportunity for small consumers to participate more concretely in the energy transition at the local level. It will foster individual involvement and awareness on energy topics while providing an opportunity for new decarbonised options for the energy system.

Member States have time until June 2026 to transpose the changes in the Directive 2019/944 on common rules for the internal market for electricity. That seems like a long time, but it’s in fact not a lot if we consider the Directive’s lack of clarity over the definition of energy sharing. Something EU countries will have to deal with before transposing it into national law.

Clearly, the implementation of the EMD directive revision provides an opportunity to clarify the European framework for energy sharing, but the new definition does not encompass all the possible structures for energy sharing, namely:

1. Peer-to-peer (household to household, for example) trading;,
2. collective self-consumption; and
3. energy communities.

These are all great ways for smaller consumers to engage more concretely in the energy transition, but their structures should not be overly complex and their implementation should fairly allocate costs, taxes, network charges and compensation to avoid discrimination in the market. This would ensure that customers are encouraged to engage and provide the flexibility benefits of energy sharing without endangering local grids, which would in turn put them at increased risk.

We also need to ensure a fit-for-purpose customer protection to not put those who engage in energy sharing at undue risk and fully recognise the role of energy sharing in providing flexibility to an increasingly variable generation-based energy system.

Proper implementation is key to unlock all the potential benefits that energy sharing has to offer. To this end, Eurelectric has expressed in its position paper 5 key asks to policymakers for a fair and functional implementation of energy sharing. Take a look at our full position paper for more information.

What is Eurelectric doing for energy consumers?

Eurelectric is actively involved in consumers’ issues, spanning all pre-sale and post-sale processes. Consumers should be able to make an informed choice among a variety of offers and be protected from any unfair practices. They will have that choice wherever suppliers and other service providers (ESCOs, aggregators, local energy cooperatives, etc.) can freely enter the market, compete on a level playing field, innovate to develop new products and services and meet different consumer expectations.

Areas such as marketing and contracting on the one hand, and billing, customer care, switching and dispute resolution on the other hand, are all crucial to ensure that consumers feel at ease while dealing with their electricity service provider.

The power sector is engaged to make sure that the regulatory framework allows consumers to benefit from innovative offers, fair prices, transparent bills, and impartial dispute settlement mechanisms, as well as ensuring that their data are protected and secure. To this end, Eurelectric begun in 2020 its Power to People project with a set of 15 pledges to Customers. Since the launch of the 15 Pledges to Customers in March 2020, suppliers have stepped up their efforts to give consumers more choice, more control and a better user experience. Over 90 European retailers pledged to empower their 200 million residential consumers with new services that made their experience clearer, cleaner, and more affordable. The project is currently being revised in 2024 and 2025 to gauge the progress made in empowering consumers to participate in the energy transition after the energy crisis.

Empowering people – Eurelectric’s 15 pledges to energy consumers

The power sector is committed to innovating and partnering with end-users, service providers, and local authorities to provide sustainable options to all citizens. This includes facilitating the adoption of electric mobility, energy efficiency services, and renewable generation.

The European power sector therefore pledges to:

1. Help customers contribute to the development of carbon neutral electricity through various services such as transparent decarbonised offers, photovoltaic & storage packages, or investments options in local renewable generation.
2. Develop innovative electric solutions to assist households in managing their energy consumption and improve comfort at home through home management systems, energy efficiency, demand response and storage.
3. Actively inform and advise people about the most appropriate way to generate their own renewable electricity, and insulate their homes, and charge their cars.
4. Facilitate the adoption of electric solutions by acting as intermediary between consumers and other service providers involved throughout the process – from contracting and financing to installation and maintenance.
5. Provide our expertise to local authorities and communities in planning, deploying and ensuring public acceptance of the infrastructure needed for the energy transition, from charging stations for electric vehicles to small scale renewables projects.
6. Assist consumers to invest into appropriate technologies such as heat pumps, solar generation, storage, electric vehicles’ smart charging, as well as home insulation by urging policymakers to have robust budget for the energy transition and cooperating with financial institutions to develop green loans.
7. Give households personalised advice to better manage their energy consumption and inform them about costs, payback and expected benefits of available technologies.
8. Continue to advocate for lower levels of taxes and levies in electricity bills and cost-reflective network tariffs thus contributing to affordable and inclusive energy transition for all customers.
9. Support customers and communities in generating, storing and consuming their own renewable power – in a fair and efficient way both for all customers and for the system – and to earn additional revenue by providing flexibility to system operators.
10. Provide vulnerable customers with advice on our offers and cooperate with governments and social services to guide them towards relevant support schemes and local actors.
11. Ensure high quality customer care that is responsive, friendly, and adapted to each customer’s needs, from the most active ones to those who choose to “connect and forget”.
12. Assist end users to navigate through our products by providing clear, transparent and consistent information in our offers, contracts and bills.
13. Offer user-friendly products and services, with easy opt-in and opt-out.
14. Become an information hub on available support schemes and technology options and provide our consumers with administrative support and guidance for paperwork.
15. Apply best data protection practices to ensure that people have full control over the data collected from them or on their behalf.

How can the EU raise consumers’ awareness?

Eurelectric’s 15 pledges must align with policy efforts to effectively raise consumers’ awareness. The political landscape today can ensure an affordable and inclusive transition by providing:

Clear & reliable information

To make informed choices, consumers should have access to accurate data. The power sector provides government-certified information. This includes certified comparison websites for estimating the carbon footprint and cost reduction of key electric solutions, such as EVs, heat pumps, and home management systems, compared to incumbent technologies like internal combustion engines (ICEs) and gas boilers.

Financial support

Facilitating access to financing is vital to mitigate the high upfront cost of energy-efficient electric appliances. This involves developing independent evaluation tools to assess the financial viability of investments, in partnership with the financial sector. Where necessary, public guarantees are used to de-risk electrification investments. Additionally, financial support is provided to allow for co-investment in advanced and innovative energy services.

However, in order to address the concerns plaguing the third group of consumers, vulnerable users, the sector and subsequent policies have to implement a much more pointed strategy to the cause. This leads us to a critical focus: the targeted strategies and policies crafted to back vulnerable customers.

Targeted strategies for vulnerable customers

Strengthening the role of social services is crucial to identify and assist vulnerable and low-income customers early on. Co-investment with private parties in energy-saving initiatives, such as building renovations, help these people save costs and adopt sustainable green solutions. These measures are part of a broader strategy to align political efforts with consumer needs, ensuring that the transition to a more sustainable power system is both affordable and inclusive for all.

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The power sector, led by Eurelectric’s initiatives, is addressing consumer concerns with a comprehensive strategy focused on innovation, consumer empowerment, and sustainability. By fostering competition, enhancing consumer choice, and ensuring transparency, the sector is not only helping consumers manage their energy costs but also driving the broader green transition towards a decarbonised future.

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