Three quarters of the electricity generated in the EU this year came from clean energy – shows the Power Barometer 2024 study, carried out by Eurelectric. While the energy sector continues to lead in decarbonisation, Europe’s economy is not electrifying fast enough. Between 2022 and 2023, electricity demand fell by 7.5%, mainly due to the closure of industries and relocation abroad during the energy crisis.
Electricity markets are experiencing unprecedented negative prices, which risk discouraging future green investment. The EU needs a solid electrification strategy to decarbonise industry while boosting energy demand and competitiveness.
In 2023, the EU’s energy sector reduced emissions by 50% compared to 2008, marking its biggest ever reduction. However, Europe’s electrification rate has stagnated at 23% over the past ten years, although it should account for half of the EU’s final energy consumption by 2040. Meanwhile, China has increased its rate by 7 percentage points since 2015.
Currently, a third of the energy consumed by European industries is covered by electricity, with only 4% of high-emission industrial heating processes being electrified. Electrification of buildings also faces difficulties, with heat pump sales falling by 5% in 2023. Electric vehicles, by contrast, have grown to a total of 9 million units in 2024, but remain far from the target of 30 to 44 million units by 2030.
“The missing piece between going green and staying competitive is electrification. Industrial sectors have a huge potential to further electrify based on available technologies,” said Eurelectric’s general secretary, Kristian Ruby, pointing to electric boilers, arc furnaces, heat pumps, induction power, plasma torches and more for energy-intensive products such as steel and aluminum.
Beyond the lack of energy demand, another concern for the sector is increased price volatility. Since August 2024, Europe has recorded 1,031 hours when electricity prices were below zero in at least one EU auction zone, mainly during solar peaks, with power producers having to pay to supply power electricity in the network. At the same time, some parts of Europe saw unusually high prices and a cross-border spread. These events, combined with low demand and frequent negative prices, complicate the business case for additional renewable energy investments.
On the other hand, negative prices can stimulate increased storage and flexibility to stabilize price volatility. However, an increase in electricity demand remains essential to solving this problem.
Eurelectric calls on policy makers to implement the Green Deal, maintain a market-friendly investment framework and set a clear electrification strategy for a competitive and decarbonised European industry.