Summary
The European Commission is in the process of adopting its Electrification Action Plan (EAP) for stimulating and boosting electricity consumption in sectors covered by the Renewable Energy Directive III, namely transport and heating/cooling and most importantly industry. The impasse affecting electricity consumption and investment in electrification technologies in the EU is primarily due to high energy costs and as such this shall be the main focus of the EAP, considering the minimum effects produced so far by recent EU initiatives. A KPI of 50€/MWh should be a maximum of total electricity costs for industry, not just the wholesale price. The success of the Electrification Action Plan will be assessed against its capacity to bring industrial electricity costs in the EU closer to the 50EUR/MWh threshold – rather than targeting a percentage of electrification.
With the present joint position paper, the signatories wish to recommend certain measures to make the EAP fit-for-purpose for energy-intensive industries and for the electrification of the EU.
Key takeaways
The EAP should therefore be constructive occasion for the EU in pursuing decarbonisation and industrial competitiveness by:
- Restoring as soon as possible competitive electricity prices and shielding energy-intensive sectors from total system costs beyond the approaches and measures adopted so far in the Electricity Markets Design Reform, the Clean Industrial Deal and the Action Plan on Affordable Energy;
- Creating the enabling conditions to invest and to roll-out new electrification technologies in industrial processes;
- Speeding up the realisation of the EU Single Market for Energy by increasing interconnectivity and maximizing cross-border trading capacity among the Member States as structural solution to distribute the benefits of the renewable energy transition;
- Incentivising flexibility, predominantly from the supply side, promoting the contribution of all renewable and low-carbon energy sources that can meaningfully contribute to climate neutrality as well as from other flexible technologies with a clear untapped potential. Enhancing flexibility and adopting a technology-neutral approach could play a significant role in reducing electricity prices in the short-term and could offer a more effective response to the energy cost disparities with non-EU countries.