The EU finally has a plan to electrify Europe – it’ll need local authorities to make it happen

The last few months have exposed the dangers of fossil fuels. From war disrupting energy supplies and driving up costs to deadly heatwaves caused by climate change, the EU knows it needs to move away from fossil energy.

A big part of the answer is electrification – powered by renewable energy. Yet, while renewable deployment is growing in Europe, its electrification is progressing slowly, stagnating at around 23% over the past decade, as other parts of the world advance. This hinders the permanent shift away from fossil fuels and exposes Europeans to recurring price shocks.

Today, the European Commission finally set out its proposal to speed up this transition by publishing its Electrification Action Plan. Its ambition: to double electrification rate so it meets 46% of the EU’s final energy consumption by 2040.

We welcome the Plan, especially at such a crucial moment. It sets a clear direction for Europe to replace fossil fuels and strengthen energy security by making electricity cheaper and more competitive, while boosting electric technologies and expanding grid connections.

In our recent report with data and examples, we’ve shown the essential role that local authorities play in shaping a more resilient and affordable energy system that is based on decentralisation and decarbonisation, through renewables, electrification and non-fossil flexibility.

What we like: making electricity the most affordable option

One of the biggest highlights of the Plan is its proposal to tackle one of the main barriers to electrification: the high price of electricity. The Plan recognises that electrification will only happen if it becomes the most affordable option for households, businesses and communities.

In most European countries today, electricity is still taxed more heavily than gas. This makes it difficult for people and companies to switch to a heat pump or other electric technologies. The Commission proposes to reduce this imbalance through taxation and with a clear phase out date for fossil fuel subsidies. These are crucial steps towards making electricity more competitive.

It also proposes a number of interesting measures to lower the upfront investment costs of electrification for households, businesses and local authorities. These include a framework allowing Member States to reduce VAT on electrification assets such as electric vehicles, heat pumps and household batteries, as well as guidelines for Member States on social leasing.

A big win: concrete support for local heating and cooling plans

One of the biggest wins for local governments is the EU’s support for heating and cooling planning. Although not a central element of the Action Plan, it recognises the importance of collective and district heating solutions to ease the pressure on electricity grids.

On this topic, the Plan highlights the need to support local authorities in their efforts to decarbonise heating and cooling. Specifically, it plans to provide financial support in developing investment concepts for local heating and cooling plans, mandated by law under EU legislation.

We have long called for a dedicated Facility – following the European City Facility’s cascade funding scheme – to help cities turn their heat plans into investable and bankable projects. And our call was heard. The Commission has stepped up to provide this support through the existing European City Facility, with a dedicated focus on financing heating and cooling plans.

The proposed pilot would support 180 plans over the next year, with the ambition of then scaling up towards 1000 investment-ready local heating and cooling plans.

What is missing: local authorities’ role in addressing the physical limits of electricity grids

The Commission also understood that one of the other main barriers to electrification lies in the physical limits of the electricity grid: including grid congestion, limited access to the grid, and the slow pace of grid expansion.

The Commission thus recognises the need to facilitate grid expansion and increase connections, encouraging system operators to engage relevant stockholders in network planning to solve the issue. However, the main blind spot of the Plan is the omission of one of the most essential stakeholders making electrification happen on the ground: local authorities!

Addressing grid constraints requires coordinated planning, much of which happens at district and city level under the leadership of local authorities. While grid operators plan network expansion and new connections, local authorities are responsible for climate planning, spatial planning, heating and cooling planning, mobility and transport planning, among many others. Together, these plans shape electrification on the ground – defining decisions on energy infrastructure as well as local production and consumption.

Our policy expert Mathieu Bourgeois says: “Through their planning, local authorities know what electrification looks like in their territory – but they need to make sure with system operators that the grid has capacity for it.“

Local authorities are also responsible for issuing many of the permits needed for grid expansion. Local plans and actions should thus be aligned with those of grid operators. This requires closer collaboration between local authorities and grid operators.

Local authorities also play a role in non-fossil flexibility – as outlined in our report – including through flexibility markets, price signals and other measures. While these are mentioned in the Plan as tools to reduce costs, their role in relieving grid congestion and avoiding unnecessary grid expansion is largely overlooked.

The way forward

Although this is absent from the Electrification Action Plan, there will be other opportunities for the European Commission to strengthen this local dimension, including through the revision of the Renewable Energy Directive later this year.

Indeed, as the Electrification Alliance pointed out, the Electrification Action Plan is just a plan. For it to turn into reality, it needs to be translated into concrete legislative proposals and national measures. The upcoming Energy Union package will be a critical moment to see how this plays out.