According to a report by the Financial Times on July 11, IAE Director Fatih Biro warned that Europe has not managed to transition sufficiently quickly away from importing fossil fuels since the energy crisis in 2022, which is a “major mistake.”
He stated that Europe's electrification rate—that is, the proportion of electricity in EU energy consumption—is only about 23%. This hinders the EU's competitiveness and economic ‘sovereignty’. The EU relies heavily on hydrocarbon imports, and its electrification rate is roughly comparable to that of major oil-producing countries like the United States.
In my view, this is a significant error for Europe, Birol told FT. Overall, I had hoped and expected Europe to give a stronger response to this crisis.
In a joint interview with European Energy Commissioner Dan Jaroen, both stated that after experiencing two energy crises in less than five years, Europe needs to achieve economic electrification more quickly. Birold pointed out that Europe should follow the example of countries like China, Japan, and South Korea, where the level of electrification exceeds 30%.
The EU has committed to raising this proportion to 32% by 2030. Yorgen said, "For the past decade, our electrification rate has been stagnant...We need electrification and we need to advance it at a faster pace."
When Yorgensen made these remarks, he was preparing to set a longer-term goal, aiming to increase the level of electrification by 2040. The Danish commissioner pointed out that when Russia significantly reduced its natural gas supply in 2022, the EU increased the use of renewable energy sources, improved energy efficiency, and reduced natural gas consumption by 20%. However, the EU's heating, transportation, and industrial sectors still rely on fossil fuels.
Jorgensen admitted that this continued dependence on imports means that the region is still severely affected by the global supply disruptions of oil and natural gas caused by the Middle Eastern conflicts.
According to reports, the European Commission is preparing to introduce measures to promote electrification next week. It will require member states to reduce electricity taxes and provide support to encourage households to adopt heat pumps, electric vehicles, and other green technologies.
The plan aims to promote electrification by introducing incentives. The goal is to have household electricity prices not exceed 2.5 times the price of natural gas by 2030, and industrial electricity prices not exceed twice that of natural gas. A draft proposal seen by FT emphasizes that currently, only Sweden and Finland, two EU member countries, have industrial electricity prices that are less than twice the price of natural gas.
Part of achieving this goal involves setting electricity tax rates lower than those for fossil fuels. However, these measures may be costly for countries that rely heavily on electricity taxes. The ratio of electricity prices to natural gas prices is at the highest level in Greece, Italy, Hungary, and Ireland.
Birold also warned that ongoing issues with grid capacity are hindering the EU’s electrification process. He noted that 600 gigawatts of renewable energy projects have been completed and are now waiting to be connected to the grid.
"Member States can start action tomorrow, accelerate power grid expansion projects, and use existing power grids more efficiently," said Jorgensson.
Snow on top of snow is, sustained heat waves are further impacting European power systems.
According to a report by 'European News Network' earlier on, extreme temperatures are putting increasing pressure on Europe's power grids. Rising temperatures have led to an increase in the demand for air conditioning in households, offices, and businesses, thereby driving up electricity demand across the European continent and the wholesale prices of electricity. 'The growing demand for cooling in Europe is reshaping the electricity demand.'
Data shows that with the intensification of heatwaves, electricity demand has increased in all four major economies of the EU: Germany's daily electricity consumption rose from 1267 gigawatt-hours on June 11 to 1396 gigawatt-hours on the 25th; France experienced an even larger increase, from 1048 gigawatt-hours to 1255 gigawatt-hours during the same period; electricity consumption in Italy and Spain also increased.
Meanwhile, wholesale prices have risen significantly. Germany, which shares the wholesale electricity market with Luxembourg, has recorded the highest prices, exceeding 200 euros per megawatt-hour; France has also experienced a sharp increase, with prices reaching nearly 160 euros per megawatt-hour; Spain's increase was more moderate, with peak prices slightly above 110 euros per megawatt-hour.
International Energy Agency energy efficiency policy analyst Fabian Woswinkel said, "Responding to such growth depends primarily on efficiency and flexibility. Improving the performance of refrigeration equipment can significantly reduce additional electricity demand." He pointed out that many places are still using less efficient portable devices.
Woswinckel also stated that solar power generation will become increasingly important, as the demand for cooling is highest during the day, and solar power generation also reaches its peak during the day. This means that most of the additional power demand can be met with relatively low-carbon electricity, thereby reducing the need for additional energy storage.
"As Europe warms up, air conditioning is no longer just a matter of comfort; it becomes related to public health and safety. It is imperative to establish power systems that can meet the growing demand for cooling."
