High Bills, Low Watts: Europe’s Power Paradox

Achieving climate neutrality in Europe will require about €480 billion in additional investment every year. Brussels is countering high‑priced, low‑volume electricity with the permanent CISAF state‑aid framework, ‘future‑proof’ grid‑tariff guidelines and a €45 billion bill‑relief scheme, seeking to safeguard both industry and consumers.

The European Commission proposes an amendment to the EU Climate Law, setting a 2040 EU climate target of 90% reduction in net greenhouse gas (GHG) emissions, compared to 1990 levels, as requested by the Commission Political Guidelines for 2024-2029. Brussels now faces an uncomfortable truth: Europe’s green leadership is defined by cleaner electrons and tighter belts, but not by lower bills or competitive power for its industry. A cascade of new measures—the permanent CISAF state‑aid framework, “future‑proof” network‑tariff guidelines, and a promised €45 billion in bill relief—aim to close this widening cost‑consumption gap. Can these initiatives meaningfully rebalance the race to net‑zero, or will Europe remain the region that consumes the least energy yet pays the most for it?

By Paolo Licandro

6 MINUTES READ

Brussels, 7 July 2025 - With its new 90 % net‑emissions‑cut target for 2040 and the Clean Industrial Deal (CID), the European Commission has doubled‑down on global climate leadership. Yet inside the Berlaymont the mood is hardly triumphant.

Officials concede that, without rock‑solid investor signals, the EU’s “world‑leading” headline goals risk looking like “ambition on paper, uncertainty in practice.” BusinessEurope’s latest reform barometer names regulatory burden and policy volatility as the top two drags on the EU investment climate , while NGOs warn that the draft State‑aid rulebook (CISAF) still leaves loopholes for fossil gas.

Outside the Berlaymont, the numbers tell a harder story. European households now consume barely 1.7 MWh of electricity per person—less than half the American average and soon below China—yet still pay roughly US $0.30 kWh, fully 2–3 × the U.S. tariff and 3–4 × China’s regulated price.

Industrial users face the same hierarchy. Energy costs already drive aluminium smelters and battery makers toward cheaper grids abroad, feeding a de‑industrialisation narrative that collides head‑on with the Green Deal’s promise of “good jobs at home”.

Brussels puts the annual investment gap at €480 billion. To keep capital and voters onside the July package rolls out:

The permanent Clean Industrial State‑Aid Framework (CISAF), in force since 25 June 2025, is designed to give projects visibility to 2030. Industry groups praise its extra “fire‑power”, but investors say rules alone will not offset grid bottlenecks, permitting delays and uneven national incentives. A Reuters survey finds capital “flowing to net zero only where policies stay stable and power is cheap” —conditions still patchy across the EU.

Wholesale electricity prices fell about 20 % in 2024, thanks to cheaper gas and a mild winter yet retail bills remain well above pre‑crisis levels. Average household prices dipped to €28.7/100 kWh in late 2024—down only marginally and still painful for low‑income families . Some capitals, notably Greece and Italy, continue to pay among Europe’s highest tariffs, straining competitiveness despite billions in subsidies.

Brussels’ Action Plan for Affordable Energy and fresh guidance on “future‑proof tariffs” promise €45‑bn in savings next year, but analysts note the documents offer recommendations, not legally binding consumer‑price shields.

EV adoption is another pressure point. Only 5 % of battery‑electric models available in Europe cost under €30 000; sub‑€25 000 models make up a mere 3 % of offerings. McKinsey reports the EV share of new‑car sales slipped from 24 % (2022) to 21 % (2024) before stabilising, while manufacturers warn of an “EV winter” unless cheaper cars arrive quickly. High purchase prices plus elevated power bills risk slowing fleet turnover, jeopardising the 100 % zero‑emission‑vehicle target for 2035.

EU electricity consumption shrunk 2.8 % in 2022 and another 3.3 % in 2023, hitting a 20‑year low, before edging up just 1.4 % in 2024. Eurostat data confirm that total primary‑energy use is at its lowest since 2005 . Much of the dip reflects price‑driven industrial cut‑backs, not efficiency gains—hardly the “demand‑side success story” policymakers would like to tell.

Behind all these symptoms lies a structural gap: the EU is approving renewables faster than it is extending grids, storage and charging networks. The Commission’s July guidance urges Member States to zone land for transmission lines and storage and to overhaul tariff design, but stops short of a binding build‑out target . Until cables, transformers and chargers catch up, both investors and consumers will keep questioning whether ambition can meet reality.

Conclusions

Europe’s green experiment is no longer held back by a lack of ambition – it is being slowed by a shortage of trust, price relief and concrete steel in the ground.

Power bills are still bruising wallets. Wholesale gas has retreated, yet retail electricity for households averaged €28.7 per 100 kWh in late 2024, scarcely below the crisis peaks and a third higher than the 2021 norm Even “non‑household” users – the very factories Brussels hopes to keep onshore – still pay almost €0.19 per kWh on average, double the Finnish price and triple the U.S. Midwest benchmark. Without visible savings on monthly bills, EU climate policy feels like a promise citizens keep funding but never cash in.

Sticker shock is cooling the EV boom. Battery‑electric cars grabbed headlines, but their EU market share slipped from 14.6 % in 2023 to 13.6 % in 2024. One key reason: only about 5 % of available BEV models cost under €30 000, and a wafer‑thin 3 % sit below €25 000 . As one German dealer grumbles, “People like the idea of clean driving – they just can’t afford the down‑payment.”

Demand is falling for the wrong reasons. EU‑wide “gross available energy” sank another 4.1 % in 2023, marking two straight years of contraction. Officials cheer the emissions dip, but energy‑intensive companies are simply throttling output or shifting it abroad; the climate ledger looks good because the industrial ledger looks thin.

Brussels is trying to solder the policy wiring, rolling out a permanent Clean Industrial Deal State‑Aid Framework (CISAF) on 25 June 2025 and an Affordable Energy Action Plan that claims €45 bn in consumer savings next year. Big numbers, bold rhetoric – yet both dossiers rely on national treasuries to foot much of the bill and stop short of binding infrastructure quotas. One EU diplomat quips: “We’ve legalised aspiration; now we need excavators.”

The credibility gap is widening. Investors see targets racing ahead of permitting queues; households see green slogans but grey invoices; automakers see sunset dates for combustion engines but no sunrise in charging capacity. Unless grid steel, cheap electrons and affordable e‑mobility arrive in tandem – soon – Europe risks turning its climate moon‑shot into a headlines‑only orbit.
Brussels has, in short, put the policy cart miles ahead of the horsepower. The next 18 months will show whether fresh cash, faster permits and tougher consumer safeguards can pull the wheels back into line – or whether the bloc’s green transition stalls at the traffic lights of public doubt.

Analytic data

Let's see now some figures. EU and US prices come from Eurostat and the EIA, which publish half‑year and annual averages; China still regulates most tariffs, so publicly available figures are ranges derived from provincial tariff bulletins and CEIC’s city‑level price monitors. Where 2024 full‑year numbers were not yet published, we averaged the two most recent semesters/quarters.

Average Household Electricity Price and Consumption– 2015‑2024

The Line chart shows the average retail electricity price paid by households over 2015‑24 in the EU‑27, the United States and China.
The stacked-bar chart Per‑Capita Household Electricity Consumption.

Price divergence widened after 2021

The EU’s post‑crisis price spike is still visible: household power stayed above US$0.30/kWh in 2023‑24, roughly 2½ × the US average and 3½ × the regulated Chinese tariff.
US prices rose too, but by mid‑2024 households still paid only US$0.13/kWh on average.

Per‑Capita Household Electricity Consumption

U.S. households remain the most power‑hungry at roughly 4.3–4.8 MWh per person. EU households hover around 1.7–1.8 MWh, while Chinese households climb from 0.9 to 1.1 MWh, gradually closing the gap with Europe.

This graphics use the latest public datasets and press‑release figures, converted to US‑dollar terms for direct comparison ( € → US$ ≈ 1.10; ¥ → US$ ≈ 0.14).

Industrial Electricity Price 2024 (Cost Split By Energy Source Contribution)

The charts reinforce a double asymmetry:

Europe consumes the least electricity per head (in both households and industry) yet still pays the highest unit prices which are dominated by renewables.
China is catching up or overtaking on consumption volumes while still benefiting from coal‑driven low tariffs.
The United States leads in per‑capita usage across the board but shields consumers with comparatively low power prices, thanks largely to abundant natural gas.

Stacked bar chart on industrial price for 2024

Each bar has coloured segments that reflect the share of the main fuels used to generate that electricity in each economy.

Latest industrial price points: EU ≈ 21 ¢, China ≈ 10 ¢, US ≈ 8 ¢ per kWh.
EU electricity is now ~50 % renewables and 22 % nuclear, so the green segment dominates the EU bar even though the total bar is highest. This means that the price of renewables dominates the cost of kwh in Europe.
US power still leans on gas (≈42 %) and coal (≈16 %), with renewables at ~24 %.
China remains coal‑heavy (≈60 %), which shows up in the tall dark segment, even if its absolute cost per kWh is lower.

Per‑Capita Industrial Electricity Consumption (2020‑24)

The pattern flips for industry: Chinese factories now use almost 4.0 MWh per citizen—surging past the EU and approaching the U.S. range (4.0–4.3 MWh).
The EU industrial slice is lowest and trending downwards, reflecting both de‑industrialisation and efficiency gains.

This graphics use the latest public datasets and press‑release figures, converted to US‑dollar terms for direct comparison ( € → US$ ≈ 1.10; ¥ → US$ ≈ 0.14).

Implications for the transition.

High EU prices + capital‑intensive renewables mix = investors need very clear, stable returns (hence Brussels’ push for long‑term PPAs, CISAF state‑aid ceilings and tariff reform).
US advantage comes from cheap domestic gas and wide open spaces for low‑cost renewables – but grid bottlenecks are starting to erode that edge.
China’s low retail tariffs help EV adoption but mask heavy reliance on subsidised coal; further renewables growth will require deeper market reform to reflect true generation costs.