Energy is a building block and a driving force of our Union, and an area where most actions to mitigate climate change can be taken. However, high energy costs are hurting EU citizens and businesses. Energy poverty affects more than 46 million Europeans and electricity is about 3 times more expensive than gas in many European countries. For industries, retail electricity prices have almost doubled since the beginning of the energy crisis in 2021.
Affordable Energy Action Plan
As part of the Clean Industrial Deal, the Commission presented on 26 February 2025 an Affordable Energy Action Plan (COM/2025/79), which is based on 4 pillars:
- Lowering energy costs for all
- Completing the Energy Union
- Attracting investments and ensuring delivery
- Being ready for potential energy crises
The Action Plan includes 8 actions, many of which will be delivered already in 2025.
EU countries can already lower electricity bills, but greater ambition is needed, especially in the areas of network charges and taxation. The Commission will put forward a methodology to ensure that network charges incentivise the most efficient use of the grid, lowering energy system costs and total new grid investment needs, and will make recommendations to EU countries to lower national taxes on electricity, immediately reducing energy bills.
Costs can be better controlled by swiftly and fully applying existing EU electricity rules, and additional actions to promote the uptake of long-term electricity supply contracts, accelerate permitting procedures for key energy projects, reinforce grids and boost flexibility. An energy system underpinned by market integration, renewable generation and flexibility could result in 40% lower wholesale electricity prices on average in the EU.
EU gas wholesale prices have not fully reverted to pre-crisis levels, affecting the competitiveness of the European industry. Full regulatory oversight and close cooperation between energy and financial regulators is required. The Commission will explore how to harness the Union’s purchasing power to get a better deal for imported natural gas. Protecting EU buyers against price volatility of fossil fuels could lead to a significant short-term reduction in retail prices.
Energy efficiency helps avoid high energy bills. The Commission will support market actors who provide energy efficiency solutions for businesses through the European Energy Efficiency Financing Coalition and update its rules on energy labelling and ecodesign for products - which brought estimated savings of around €120 billion on energy bills in 2023, and could rise to about €162 billion in 2030.
Energy prices can differ considerably between EU countries. To enhance coordination and strengthen governance of the electricity system, the completion of a genuine Energy Union, including a fully integrated energy market and a cohesive governance framework, is key to preventing sharp increases of system costs of up to €103 billion by 2040 if no action is taken. Measures covered under this action include the launch of an Energy Union Task Force.
To counteract high energy prices and market uncertainty, a broader tripartite contract for affordable energy can bring together the public sector, energy producers, and energy-consuming industries to create a favourable investment climate, facilitating a competitive EU industrial sector, while ensuring the retention and creation of quality jobs.
Ensuring secure EU energy supplies is critical for our economic resilience, continued access to affordable energy and avoiding extreme price volatility. A resilient energy system must be able to withstand potential supply disruptions resulting from geopolitical tensions, cyberattacks, deliberate attacks or extreme weather events, which threaten affordability.
Europe must be prepared to protect the affordability of energy in the event of an energy price crisis. The Commission will guide EU countries on the application of measures that incentivise consumers to reduce demand at certain times and will work with transmission system operators and national regulatory authorities to temporarily increase electricity flows in cross-border interconnectors, in certain situations.
Energy prices – EU priority actions
Building on the Affordable Energy Action Plan, we need to bring energy prices at a level assuring Europe’s competitiveness.
The Commission has identified 7 priority actions to help the EU, and EU countries to reach this goal, while taking into account the regional and national factors.
Make full use of the enhanced State aid framework
The new Clean Industrial State Aid Framework for the first time enables price relief for energy-intensive industries. In addition, EU countries can support energy-intensive industries in their energy decarbonisation transformation.
The Italian Energy Release scheme can serve as an example of such a framework. It ensures relatively low and stable electricity prices for industry in exchange for the renewables buildup. The Belgian Offshore Renewables scheme supports renewables build-out and directly translates into stable-price long-term electricity contracts for industry.
Under the Mid-Term Review Regulation (EU/2025/1914), EU countries can present revised programmes until the end of the year and accommodate support to the needed investments in energy.
These rules include more favourable conditions for reprogramming, such as higher pre-financing, co-financing improvements, additional implementation time, increased support to the Eastern region and the extension of the support to include large enterprises.
Any EU country needing to beef-up national investments in energy should take this opportunity.
The Commission is organising a European Network of Energy and Managing Authorities of Cohesion Policy on 4-5 November 2025 to support this.
Engage promotional banks and work with the EIB to de-risk Power Purchase Agreements for industry and SMEs
Spain and Germany together account for at least 25% of all Power Purchase Agreements (PPAs), but the increase is rapid in other countries like Bulgaria, Greece and Sweden.
PPAs are long-term energy supply contracts where a fixed or indexed price for electricity is agreed for long-term period, typically 10 to 20 years. Where PPAs are signed between energy developers and industrial suppliers, both benefit
- industry gets the retail price stability they need, decoupling themselves from price risks, such as gas price volatility
- energy developers secure long-term revenues, which helps them take new investment decisions
The EIB and the Commission have recently launched a €500 million pilot programme to support such PPA counter-guarantees, as well as €3 billion to increase manufacturing capacities for grids and wind turbines, and €17.5 billion for energy efficiency.
In addition, the Commission will adopt a Clean Energy Investment Strategy in early 2026, including de-risking tools to accelerate the mobilisation of private capital for the uptake of clean energy.
Across the EU, examples abound how increasing the share of wind, solar, hydro and nuclear energy limits reliance on and exposure to volatile gas prices. In Spain, for example, thanks to the deployment of renewable energy, fossil energy now only sets the price in 19% of the hours, compared to 75% in 2019.
Prioritise interconnectivity and grid expansion nationally to limit congestion and enable businesses to connect
Today, Luxembourg, Estonia, Croatia and Slovenia have high interconnection levels compared to the energy they need, while countries such as Spain, Italy and Poland remain poorly interconnected.
Agreeing on the European Grids Package and delivering the 8 Energy Highways that President von der Leyen announced in her State of the European Union speech, will be paramount to securing affordable energy across Europe. Moreover, the Energy Union Task Force, launched in June 2025, has the potential to provide the forum for difficult political discussions needed to advance on our single energy market and EU.
The EU-U.S. deal is essential to support diversification, but the EU also has partnerships for gas supply with Norway, the UK, Algeria, Qatar and others.
LNG markets are by definition global, and that means that prices will depend on world-wide supply and demand balances, but where we can have a direct influence is on enhancing our purchasing power through gas demand aggregation under the EU Energy and Raw Materials Platform. It will help European companies make new and better deals, reduce transaction costs and increase visibility.
Lower taxes and levies, with a strong focus on electro-intensive industries and vulnerable consumers, and provide tax credits for the electrification of industry
In certain EU countries like Malta, Luxembourg and Croatia, taxes and charges are relatively low. Denmark and Germany are also taking action by introducing rules to reduce electricity taxes to EU minimum. These practices could be replicated in other countries.
The Commission issued recommendations on tax incentives in June 2025 and will soon offer additional assistance on lowering energy bill taxation.
- News announcement: Commission steps up efforts to lower energy prices with a set of actions to bring relief to industries and consumers (21/10/2025)
- News announcement: Commissioner Jørgensen announces first 2 sectorial tripartite contracts (5/9/2025)
- Press release: Commission continues action to lower energy bills with new guidance on renewables, grids infrastructure and network tariffs (2/7/2025)
- Press release: Commission brings relief to European consumers and businesses with Action Plan to save €260 billion annually by 2040 | Factsheet - Action Plan Affordable Energy (24 EU languages) (26/2/2025)
- Speech: Opening statement of Commissioner Jørgensen in the European Parliament Plenary debate on the Action Plan for Affordable Energy (13/3/2025)