Energy is a building block and a driving force of our Union, and an area of particular importance for Europe’s competitiveness and security. To deliver on the Clean Industrial Deal, Europe needs affordable energy.
While energy costs for the average European business are relatively low in relation to their total costs, they constitute a significant share of the total production costs for energy-intensive industries, such as chemicals, metals, glass and paper. Energy costs thus shape investment decisions in these industries.
At household level, high energy costs are hurting EU citizens. Energy poverty affects more than 46 million Europeans, and electricity is about 3 times more expensive than gas in many European countries.
As part of the Clean Industrial Deal, the Commission presented on 26 February 2025 the Affordable Energy Action Plan (COM/2025/79). Complementing this, in October 2025, the Commissioner for Energy and Housing Dan Jørgensen called on his EU counterparts to take action on 7 priority areas to accelerate energy price relief on industries and households.
Affordable Energy Action Plan
The Affordable Energy Action Plan includes 8 actions, many of which were already delivered in 2025. These actions are based on 4 pillars
- lowering energy costs for all
- completing the Energy Union
- attracting investments and ensuring delivery
- being ready for potential energy crises
Achieving the full benefits of the Action Plan depends on measures implemented by EU countries, including on taxation, streamlining permitting and making use of the revised State aid framework. While many EU countries took action in 2025, further efforts are needed in 2026 to ensure rapid and lasting relief for industries and households.
In the State of the Energy Union Report 2025, the Commission summarised the progress on the delivery of the Affordable Energy Action Plan.
EU countries can already lower electricity bills, but greater ambition is needed, especially in the areas of taxation and network charges. This means lowering taxation of electricity and removing non-energy cost components from bills, more efficient network charges to reduce energy system costs, and enabling consumers to switch energy suppliers, and to benefit from affordable renewable energy, for instance.
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.
Despite significant improvements, EU gas wholesale prices have not fully reverted to pre-crisis levels, affecting the competitiveness of European industry. Protecting EU buyers against fossil fuel price volatility could lead to a significant short-term reduction in retail prices.
Energy efficiency helps avoid high energy bills and can significantly cut annual fossil fuel import bills by an estimated €33 billion by 2030 and €70 billion by 2040. Supporting market actors who provide energy efficiency solutions for businesses and updating rules on energy labelling and ecodesign for products, among other measures, can help deliver these savings.
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 in system costs of up to €103 billion by 2040 if no action is taken. Measures covered under this action include the cooperation under the Energy Union Task Force.
To counter high energy prices and market uncertainty, tripartite agreements 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. By mutually reinforcing commitments, private and public actors can support a conducive investment framework and secure the supply of affordable energy to Europe’s industries.
Ensuring secure EU energy supplies is critical for economic resilience, continued access to affordable energy and the avoidance of 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, all of which can threaten affordability.
Europe must be prepared to protect the affordability of energy in the event of an energy price crisis.
The Commission will support EU countries in applying measures that incentivise consumers to reduce demand at specific times. It will also 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
For the first time, the new Clean Industrial State Aid Framework enables price relief for energy-intensive industries. In addition, EU countries can support these industries in their energy decarbonisation transformation.
Examples include
- Italy: Energy Release scheme to ensure relatively low and stable electricity prices for industry in exchange for the renewables build-up
- Belgium: Offshore Renewables scheme to support renewables build-out and provides long-term electricity contracts for industry at stable prices
- Romania: Electricity storage scheme to support the installation of at least 2 174 MWh of new electricity storage facilities
Under the Mid-Term Review Regulation (EU/2025/1914), EU countries had the opportunity to present revised programmes until the end of 2025 and accommodate support for 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 for the Eastern region, and an extension of the support to large enterprises.
Any EU country needing to strengthen national investments in energy should take this opportunity.
The Commission organised a European Network of Energy and Managing Authorities of Cohesion Policy on 4-5 November 2025 to provide support.
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), while growth is accelerating in countries like Bulgaria, Greece and Sweden.
PPAs are long-term energy supply contracts in which a fixed or indexed price for electricity is agreed for a long-term period, typically 10 to 20 years. When PPAs are signed between energy developers and industrial suppliers, both parties 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, supporting new investment decisions
In 2025, the EIB and the Commission have launched a €500 million pilot programme to support such PPA counter-guarantees, along with €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 clean energy uptake.
Across the EU, numerous examples demonstrate how increasing the share of wind, solar, hydro and nuclear energy reduces reliance on and exposure to volatile gas prices. Clean energy generated 70% of the electricity in the EU in 2025. In particular, wind and solar generated 30% of electricity, overtaking fossil fuels (26%). In Spain, for instance, thanks to the deployment of renewable energy, fossil energy set the price in the wholesale electricity market only 19% of hours in the first half of 2025, compared to 75% in the first half of 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 their energy needs, while countries such as Spain, Italy and Poland remain poorly interconnected.
Agreeing on the European Grids Package and delivering the 8 Energy Highways will be paramount for securing affordable energy across Europe. Moreover, the Energy Union Task Force, launched in June 2025, has the potential to provide a forum for difficult political discussions needed to advance the single energy market.
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, meaning prices depend on world-wide supply and demand balances. However, 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. This will help European companies secure 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 providing tax credits for the electrification of industry
In certain EU countries, such as 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 the EU minimum. These practices could be replicated in other countries.
The Commission issued recommendations on tax incentives in June 2025 and will 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)