EU Electrification Stalls as Rising Power Costs Deter Consumers, Analysts Say
Solar and wind additions are accelerating across Europe, but higher electricity prices are slowing the demand-side shift analysts say is needed to meet green targets.
Europe's electrification push is losing momentum even as renewable capacity additions set records, analysts told Montel on Wednesday (2026-06-24). The culprit, they said, is cost: rising electricity prices are making it harder for households and businesses to justify switching from gas boilers to heat pumps or combustion vehicles to electric ones, with consumers absorbing the gap directly.6
The numbers behind the problem are sharpest in Italy. Ember, a think-tank, calculates that gas-fired plants set the power price in 89% of hours so far in 2026 in Italy, compared with just 15% in Spain. The divergence shows up in price: Italian wholesale power averaged €142 per MWh in March 2026, against €59 in Spain, Ember data show. With ICE Endex TTF front-month gas at €41.14 on Wednesday (2026-06-24), the gas-to-power chain still dominates Italian pricing in a way that Spain's higher renewable penetration has largely broken.3
For households on variable tariffs, that gap is not an abstraction. It appears on the bill each month and shapes the calculation on whether to pay for an electric vehicle or a heat pump. Analysts told Montel on Wednesday (2026-06-24) that affordability has now become a primary constraint on electrification uptake — not consumer preference or technology availability.6
Italy's policy response has largely been to seek EU-level intervention rather than redirect domestic resources. Carlo Stagnaro, director of research at the Bruno Leoni Institute, urged a different approach. Italy runs roughly EUR 1.2 trillion in annual public spending, he told Montel. Targeting even EUR 2-3 billion toward energy cost relief — about 0.2% of that total — could address the most acute cases. "If the government is unable to reallocate even 0.2% of its budget, then the issue may be beyond reach," Stagnaro said.2
Rome is also pursuing regulatory relief through ETS reform. Italian officials are in near-daily talks with the European Commission over a proposed change to how Italian industries are treated within the bloc's emissions trading framework. A government source told Montel negotiations were proceeding with no negative feedback so far, and that Brussels appeared willing to consider Italy's case individually. But analysts cautioned the proposal might conflict with the EC's recently updated state aid rules, making approval uncertain.1
Italy faces a separate load growth challenge that compounds grid pressure. Data centre operators are expanding sharply, and consultancy Key to Energy has warned that Italian data centre power demand could quadruple to 20 TWh by 2030. Without grid investment to match, the resulting bottlenecks could divert the investment opportunity to Spain and eastern Europe instead.5
The broader European picture adds a further complication. When renewable output is high and demand is low, negative prices emerge — a signal of oversupply and a cost to baseload generators. But in the many hours when gas remains the marginal unit, prices rise. That combination makes it difficult to design consumer incentives for electrification: switching to a heat pump or electric vehicle is a bet on future low-price periods, while peak demand hours still carry significant gas exposure.4
Whether electrification catches up with renewable capacity additions depends partly on whether governments can reduce the upfront and running costs that are currently deterring adoption. Italy's outcome in its ETS negotiations with Brussels, and the EC's formal response when it arrives, will indicate how much flexibility member states have to deploy targeted state aid without triggering a wider legal challenge. Rome has given no timeline for that determination.