A combination of faster renewable energy deployment, stronger electricity grids, nuclear plant lifetime extensions and lower energy taxes could reduce average household electricity prices across the European Union by about 20% by 2030, the International Energy Agency said in a note on Thursday.
Its analyses show lower electricity prices are essential to boost adoption of technologies such as heat pumps and electric vehicles, which remain uncompetitive in many parts of the bloc at current power prices. The measures are intended to support the EU's goal of increasing electricity's share of final energy consumption to 32% by 2030.
Without the proposed reforms, average electricity prices for all consumers would be more than 40% higher than current levels, the report said. Slower renewable deployment, permanent nuclear plant closures and increased grid congestion would force greater reliance on gas-fired generation, raising wholesale power prices and consumer bills.
The analysis found that expanding wind and solar generation, reinforcing electricity grids, increasing storage capacity and extending the operating lives of existing nuclear reactors would lower system costs while improving energy security. Tax reforms, including reducing value-added and excise taxes on electricity to minimum legal levels, could further cut household electricity prices by nearly 15% by 2030 compared with a higher-cost scenario.
Natural gas prices will remain an important factor because gas-fired plants continue to set electricity prices during many hours of the year. While expanding global liquefied natural gas supplies could ease gas prices by 2030, the analysis said structural reforms to electricity supply and taxation remain critical to accelerating electrification and reducing consumer costs.