“Europe‘s electricity prices are twice as high as those of China and the United States. If that doesn‘t change, there will be no industrial future.” According to Reuters on August 1, European electricity costs are among the highest in the world. Faced with competition from the United States and China in manufacturing, artificial intelligence, and other fields, the European Union is planning to spend trillions of euros to build the world‘s first “electric continent,” hoping to revive European industrial competitiveness through building cheaper, safer electricity systems.
The EU‘s “Big Mistake”
European energy prices have skyrocketed since the outbreak of the Russo-Ukrainian conflict. The Reuters report cited data from the International Energy Agency to indicate that current European electricity prices are at least 50 percent higher than those in China and the United States. The high energy costs have severely weakened the competitiveness of industries such as chemicals, steel, and cement. On the other hand, according to statistics from the European Commission, the current rate of electrification in the European Union is stagnant at 23 percent, with plans to reach 32 percent by 2030, while electrification rates in China, South Korea, and Japan have already exceeded 30 percent. Last week, Fatih Birol, director of the International Energy Agency, also criticized this situation. In an interview with the Financial Times, Birol said that the failure of the European Union to accelerate energy transformation was a “great mistake.”
According to the German telecommunications network, Brussels did not ignore these criticisms and recently announced a new plan of action aimed at making the European Union the “world‘s first electricity continent” and accelerating the transformation of European industries, transportation and construction from fossil fuels to electricity. According to this new plan, by 2030, the European Union will increase the share of renewable energy to 42.5 percent; by 2040, electricity will increase to 46 percent in end energy consumption, investing more than 660 billion euros annually, focusing on building infrastructure such as wind power, photovoltaic power, power grids, energy storage, electric vehicles and heat pumps. The European Union hopes to reduce fossil fuel imports through this, saving €260 billion annually by 2040 in fossil fuel import costs, while avoiding tens of billions of euros in climate disaster losses, and creating large numbers of domestic jobs and industrial chains.
According to information on the European Commission‘s website, the electrification transition benefits both EU countries and ordinary citizens. After all, reducing dependence on imported fossil fuels can make Europe more independent, more competitive, and less vulnerable to geopolitical shocks. The modernization and decarbonization of European energy systems will help accelerate the green transformation, specifically for ordinary European consumers, such as electric cars that can save 78% on car use costs, heat pumps that replace gas boilers that can reduce average household heating costs by 60%, and so on. To reduce the price gap between electricity and fossil energy costs, and encourage cleaner electricity technologies, the European Union‘s electrification plan also includes reducing grid costs and taxes for energy-intensive enterprises, encouraging the use of smart meters, reducing the upfront costs of electrification technologies in key demand areas, accelerating the deployment of European power grids through a comprehensive plan, accelerating the application of innovative electrification solutions, investing in electrification skills and work, creating hundreds of thousands of high-quality jobs, and so on.
If electricity prices are not lowered, Europe will have difficulty competing with China and the United States
“Europe‘s path to independence begins with the supply of electricity,” wrote Dan Jorgensen, the EU‘s energy commissioner, in the German Wirtschaftszeitung. The European “Electric Continent” project is an ambitious but imperative goal. The EU has already seen the early signs of an electrification revolution. In the first quarter of 2026, the EU registered more than half a million electric cars. Over the same period, more than 400,000 household heat pumps were sold in France, Germany, and Poland alone. The article also cited the fact that driving an electric car costs 2.60 euros per 100 kilometers in Finland, while gasoline cars cost as much as 9.20 euros per 100 kilometers. According to Concito, a Danish think tank, European households could save between 1,700 and 3,000 euros per year if they combined electric cars and heat pumps.
The article also specifically urged EU governments to take steps to catch up: first, more wind power plants need to be built, more solar panels installed, and the next generation of nuclear power plants and technologies developed. Second, the construction of the continental European power delivery network needs to be accelerated. By 2040, Europe needs to invest 1.2 trillion euros in power delivery and distribution networks. According to the EU‘s estimates, an investment of one euro per pair of power grid upgrades could save more than two euros in overall energy system costs. The economic and social areas where the current electrification process is stagnant must be changed.
According to European News TV, a report by the US think tank Energy Economics and Financial Analysis Institute shows that building wind, solar and heat pumps will help the European Union get rid of its dependence on liquefied natural gas by 2030. If the EU can achieve the goal of installing at least 4 million heat pumps annually, adding 75 gigawatts of new photovoltaic power and 22 gigawatts of wind power, natural gas demand will be reduced by about a quarter by 2030.
According to Reuters, the European Union considers cheap and stable power guarantees to be the foundation of the artificial intelligence era. Currently, the United States owns more than half of the world‘s data centers, with China accounting for about 30 percent and Europe for only 12 percent. If electricity prices cannot be lowered, Europe will find it difficult to compete with China and the United States.
The true “power country” is China
“Since the outbreak of the Russo-Ukrainian conflict, the economic impact of the European continent replacing long-term oil and gas pipelines with expensive imported liquefied natural gas from the United States has been profound,” Reuters reported. Since 2023, European economic growth has lagged behind most of the world due to long-term industrial slowdown caused by high energy prices weighing down industries such as chemical, fertilizer, aluminum, steel, cement, and paper production.
However, Europe, which plans to create an “electric continent”, still has many challenges that need to be resolved urgently. Reuters said that the European Union‘s electrification plan still has a long way to go and obstacles to overcome. Firstly, the plan is currently only a communication document rather than a legislative text; secondly, electricity costs in European Union countries are now much higher than natural gas, with corporate electricity consumption costs reaching three times that of natural gas, and electricity taxes in countries such as Germany and Italy are also three times that of natural gas. For this, the European Union‘s primary goal is to reduce electricity usage costs. In addition, there are also measures such as speeding up grid construction and eliminating fossil energy subsidies.
However, the European Union has not set a specific timetable yet, and has to take into account internal challenges-some countries, represented by Poland and Italy, are calling for relaxation of climate regulations, while northern European countries are defending climate regulations.
A recent analysis by the Oxford Institute of Economics points out that since the outbreak of the US-Israeli conflict in 2026, China‘s exports of solar panels, batteries, electric vehicles, wind turbine components and heat pumps have increased significantly, especially in Europe, Asia, Africa and Latin America.
The report argues that since the outbreak of the conflict, under the dual impact of advanced technology applications and geopolitical changes, China has effectively become the world‘s first “electric power country”, and that this position is constantly being strengthened.