Electric dreams, fair costs: Europe’s grid overhaul must be just

A significant investment of €584 billion is needed by 2030 to modernise and expand Europe’s grid infrastructure, but both financing strategies and the design of grid tariffs should prioritize reducing the burden on households. Brussels 17 March, 2025 – Europe’s energy transition hinges on modern, expanded electricity grids – but this should not come at the expense of the most vulnerable households. A new report by Climate Action Network (CAN) Europe examines the challenges and opportunities of urgently investing in Europe’s grid network, emphasizing the need to maintain consumer affordability and equity amidst rising demand from electrified heating and transport. Today grid fees already make up a significant share of household electricity bills. The average grid cost is €0.067/kWh, but there are disparities in costs across EU Member States. For example, in Bulgaria, households spend nearly five times more of their income on grid fees than those in Denmark (2.38% vs 0.49%). In Ireland, households pay almost €450 per year in grid costs, while in Romania the costs are five times lower. “Upgraded grids, paired with smart policy, can help lower energy bills for vulnerable households and cut dependence on inefficient, costly energy sources. However, relying too heavily on consumer-funded tariffs risks deepening inequality and energy poverty. To avoid this, financing strategies should prioritize reducing the burden on households. This means tapping into existing EU funds, mobilizing public and private capital, and exploring innovative funding models that support grid operators while minimizing costs for consumers,” said Thomas Lewis, Energy Policy Expert at CAN Europe. The price of grid charges within each EU member state do not necessarily reflect the level of electricity consumption within a country. For instance, Cyprus, Finland, France and Sweden are the highest consumers of electricity within the EU, but are not paying the highest costs for their electricity compared to other countries. Despite being among the lowest electricity consumers, the burden is especially high relative to income in Central Eastern European countries. Instead, factors such as grid modernization levels, energy policy priorities, and economic conditions influence grid costs. As the report points out, this can be resolved through a diversified strategy including combining private investments, public funding, EU-level support, and innovative financing mechanisms like infrastructure funds. A balanced mix of these financing mechanisms, tailored to the economic, political, and social contexts of each European country, will be critical in ensuring a resilient, sustainable, and modernized electricity grid. A well-designed tariff system is also crucial and should balance cost-reflectiveness, affordability, and incentives for efficient grid use. One such system could be the use of progressive grid tariffs. These tariffs adjust electricity rates based on consumption levels or income brackets, aiming to alleviate financial burdens on low-income households while maintaining predictable revenue streams for grid operators. However, these tariffs should also be designed to promote grid-friendly, flexible electricity consumption. As Europe accelerates its energy transition, grid investment must go hand in hand with social fairness. Without reform, expanding the grid through traditional consumer tariffs risks deepening these inequalities. Policymakers have a unique opportunity to rethink how we finance this critical infrastructure – protecting vulnerable households while building a resilient, future-ready energy system. A clean, affordable, and equitable energy future is within reach – but only if we choose to design it that way.

-ENDS –

Notes to the Editor

Read the full report “Powering the future: Balancing Grid Investments and Consumer Protection in Europe’s Energy Transition”.
The average electricity consumption of households varies widely across EU Member States:Countries with the lowest consumption (< 2,500 kWh per year): CEE countries such as Romania, Latvia, Lithuania and Poland, but also Italy, consume less than 2,500 kWh per household and year. Mid-range consumption (2,500 – < 5,000 kWh per year): 19 of the 27 Member States, including the other CEE countries, have a consumption of between 2,500 and 4,999 kWh per household and year. Highest consumption (>5,000 kWh per year): Finland, Sweden, Cyprus and France show a consumption of over 5,000 kWh per year. Sweden and Finland have a high proportion of heat pumps and e-cars. Electricity is also often used for heating in France. Air conditioners are widely used in Cyprus.
The average EU grid cost is €0.067/kWh. These figures highlight the disparities in electricity costs across the region, influenced by factors such as grid modernization levels, energy policy priorities, and economic conditions. Lowest costs (< €0.040/kWh): Cyprus (€0.024/kWh), Malta (€0.027/kWh), Greece (€0.027/kWh), and Bulgaria (€0.038/kWh). Mid-range costs (€ 0.04/kWh – < € 0.08/kWh): 21 EU member states, e.g. Estonia (€0.052/kWh), Portugal (€0.054/kWh), Latvia (€0.055/kWh) and Lithuania (€0.058/kWh) Highest costs (from €0.08/kWh): Germany (€0.080/kWh), Belgium (€0.091/kWh) and Ireland (€0.102/kWh)