EU Unveils Ambitious Plan to Slash Energy Bills by €2.5 Trillion
March 3, 2025
ByHaley Zaremba– Mar 03, 2025, 3:00 PM CST
- The European Commission has introduced an Action Plan to save €2.5 trillion in energy bills over the next 15 years, addressing the rising energy poverty affecting 47 million people in the EU.
- The plan focuses on bringing short-term relief to consumers while decreasing dependence on energy imports by expanding renewable energy capacity and fully integrating the EU’s electricity system.
- Despite significant growth in renewable energy, major hurdles such as grid volatility and regulatory delays need to be addressed to ensure a successful energy transition.
Three years after Russia invaded Ukraine, the European Union is still dealing with the economic fallout. The resulting energy crisis has continued to reverberate through European markets, and blisteringly high energy bills are drastically impacting consumers throughout the block. It is estimated that approximately 47 million people in EU countries are currently living in energy poverty, a 57% increase since 2019.
While ‘energy poverty’ has no universal definition, the term is commonly used to refer to households that cannot afford to meet their basic energy
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eeds (such as heating their homes in frigid and even dangerous winter temperatures), or to those who spend an unreasonably high amount of their income on household energy bills.
Rising rates of energy poverty across Europe are seriously hurting households, but they are also posing a major threat to Europe’s economy writ large, and making European enterprises less competitive on the global market. In response to these intensifying issues, the European Commission, which functions as the executive branch of the European union, has introduced a plan to save a total of €2.5 trillion in energy bills over the next 15 years.
The Action Plan outlines steps to bring short-term relief to consumers while continuing to decrease its dependence on energy imports (most notably Russian oil and gas) through the completion of the European Energy Union by fully integrating the bloc’s electricity system, alongside other related measures. It aims to do this by “frontloading the benefits of more renewable energy, energy savings, deeper market integration and better interconnections.”
“We’re driving energy prices down and competitiveness up,” said European Commission President Ursula von der Leyen. “We have already significantly reduced energy prices in Europe by doubling down on renewables. Now, we are going a step further with the Affordable Energy Action Plan as part of our Clean Industrial Deal. With it, we will achieve more predictable prices, stronger connections across Europe, and increased energy offtake. We will systematically remove remaining obstacles so that we can build a true Energy Union.”
The European Union’s expansion of renewable energy capacity has skyrocketed since the Russian invasion of Ukraine as the bloc has tried to source more energy from within its own borders. As the continent has tried to wean itself off of Russian fossil fuel imports, solar and wind have emerged as strategic investment sectors. When the invasion occurred in February 2022, Germany – Europe’s largest economy – was dependent on the Kremlin for more than half of its natural gas and a third of its oil. Now, just three years later, Germany is set to derive 20% of its energy from solar power.
However, there are still major hurdles to continue the expansion of renewables in Europe. For one thing, the rapid addition of variable energies without sufficient supportive infrastructure (such as energy storage and grid connectivity) can cause grid volatility and even negative energy prices, which are great for consumers but not so great for investors. The planned doubling down on renewable energy proposed by the European Commission’s new Action Plan will therefore require measures to address these challenges, as well as significant alterations to current regulatory mechanisms that can cause long delays on adding new renewable capacity and related infrastructure.
“Renewable energy is much cheaper than the fossil alternative. So that will bring the prices down,” the EU Commissioner for Energy and Housing told Euronews this week. He also emphasized that better connectivity in European electricity grids, and more grids in general, will also help to relieve energy poverty. “Also, if we are better connected in Europe – our electricity system, so we have more grids, we are more interconnected, that will bring down the prices as well. “And finally,” he went on to say, “the gas market, they need to be better controlled so that we make sure that they don’t have profits that are too high.”
By Haley Zaremba for Oilprice.com
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