THE ENERGY INDUSTRY TIMES - MAY 2026

Final Word

s the Strait of Hormuz remains

closed, and the war against

Ukraine rumbles on, European

households and businesses continue to

creak under the pressure of astronom-

ical energy prices. In response to the

ongoing energy crisis, the European

Commission recently issued its Accel-

erateEU Communication – one part of

“a toolbox of targeted temporary mea-

sures” to address the recent spikes in

the prices of imported fossil fuels aris-

ing from the war on Iran. Yet striking

the right balance between bringing

short-term relief to its consumers,

while maintaining long term objec-

tives for the bloc, is a tricky one.

According to the Commission, the

Middle East situation has already cost

the EU more than €24 billion, about

€500 million per day, due to continued

dependence on imported fossil fuels.

It is no wonder AccelerateEU stresses

the need to replace fossil fuel imports

with homegrown energy.

But its approach must be careful not

to undermine Europe’s long-term

green transition goals. Pointing to

investments in electrication, energy

efciency and interconnections as

key priorities, EU competition and

climate chief Teresa Ribera, who

previously served as Spain’s Ecolog-

ical Transition Minister, said: “There

are things that we know we need to

do. The earlier we do them, the more

opportunities we build and the lower

costs we may be facing.”

To protect consumers from fossil

fuelled price peaks, AccelerateEU al-

lows member states to introduce

support schemes, energy vouchers and

social leasing schemes and lower ex-

cise duties on electricity for vulnerable

households. For industrial consumers,

the Commission will separately adopt

updated State aid rules, allowing

member states to support the most

exposed economic sectors.

Crucially, the Commission will

present legislative proposals on net-

work charges and taxation this month

(May), so electricity is taxed less than

gas. In addition, the Commission will

present an Electrication Action Plan

by the summer which will include an

electrication target.

AccelerateEU also urges EU mem-

ber states to implement the European

Grids Package, including addressing

grid connection queues – there are 400

GW of wind energy capacity current-

ly waiting for grid connections.

Solving this is possible: the UK has

halved its queues, from 144.5 GW in

2024 to 73.6 GW now.

Finally, AccelerateEU will help

member states make the most of their

EU funding to decarbonise and

electrify. This includes the €219 bil-

lion Recovery and Resilience Facili-

ty, EU cohesion funds as well as a

new €100 billion Industrial Decar-

bonisation Bank auction.

Ribera stressed that support should

focus on structurally lowering energy

bills, for example by expanding solar

panels, heat pumps and better insula-

tion, rather than relying on emergency

measures that risk distorting market

signals needed for the green transition.

She also warned against market

fragmentation. “We can build on a

common menu of solutions that help

the long-term transformation that we

need so that member states can

choose.”

Eurelectric, the organisation repre-

senting Europe’s electricity sector,

also warned that striking a balance

between short-term xes and long-

term goals will be crucial. In a state-

ment, it said Europe needs to provide

immediate relief to consumers and

industry but at the same time, it needs

to attract investment in clean energy,

grids and exibility if it wants to avoid

future crises.

It said “pushing electrication is the

only way out of the fossil fuel depen-

dency” but stressed that not all of the

Commission’s proposed measures

achieve the objectives of reducing

energy costs and short-term price

volatility, while preserving long-term

investment signals.

It noted that past interventions such

as gas price caps or broad subsidies,

including those implemented in Iberia

in 2022, have shown they can be dis-

tortive to the internal market and de-

liver limited benets to consumers.

Looking across the different compo-

nents of electricity bills, Eurelectric

identies several targeted measures

that can lower costs quickly without

undermining market functioning.

Taxes and levies is the rst area. It

says member states can lower VAT in

electricity, shift scal burdens onto

fossil fuels to incentivise electrica-

tion or exempt vulnerable consumers.

Removing non-energy-related levies

and cross-subsidies would also have a

direct impact.

Network tariffs, it says, should also

be targeted. Here, regulators can in-

centivise consumers to optimise ca-

pacity use and shift demand away from

peak periods.

Carbon costs could also offer imme-

diate support. The European Commis-

sion’s proposed €30 billion ETS

(Emissions Trading Scheme) Invest-

ment Booster (funded by 400 million

EU allowances) could support indus-

trial consumers. A targeted adjustment

of the Market Stability Reserve and

related parameters would help indus-

try while preserving the ETS as a

credible investment signal. More ef-

cient use of ETS revenues (over €43

billion raised last year alone) is also

critical to accelerate decarbonisation

and industrial transformation.

Directly targeting energy costs also

offers short-term ease. State aid tools,

such as the industrial price support

proposed in the Clean Industrial State

Aid Framework (CISAF), alongside

unlocking demand-side exibility, can

bring targeted relief, says Eurelectric.

Beyond these immediate xes, the

organisation says structural solutions

include: scaling up electrication, in-

cluding institutionalising the Industri-

al Decarbonisation Bank pilot auction

with a stronger, dedicated budget;

expanding long-term contracts such as

Power Purchase Agreements (PPAs)

and Contracts for Difference (CfDs)

to stabilise retail prices; and acceler-

ating the deployment of clean,

homegrown electricity generation,

exibility and storage to reduce Eu-

rope’s exposure to fossil fuel price

volatility.

The “homegrown” energy” element

is one that continues to chime strong

under current geopolitical tensions.

Renewables and energy storage pro-

ponents voiced strong support for this

element of the AccelerateEU plan,

especially as war again demonstrates

the fragility of a fossil-dependent

system.

WindEurope said that “with Accel-

erateEU, the Commission is crystal

clear”: any energy price relief mea-

sures must be underpinned by a faster

transition to homegrown renewables

and a more electried economy.

“It’s wake-up call for member states

to nally implement EU permitting

rules. And it specically highlights the

role repowering old wind farms can

play in boosting renewable power

supply,” said the organisation.

“Electrication is a strategic imper-

ative for Europe’s independence, se-

curity, and prosperity. It needs to

happen immediately and at scale. We

must make homegrown electricity the

cheapest option,” said Tinne van der

Straeten, WindEurope CEO. “This

means cutting VAT and taxes on heat

pumps, electric vehicles and other

electrication technologies. It means

addressing the low hanging fruit in

low- and medium temperature heat

processes. AccelerateEU is bold polit-

ical leadership in a time of crisis.”

Philippe Dumas, Secretary General

of EGEC, stated: “The Commission’s

focus on homegrown energy correctly

shines a spotlight on geothermal. It

provides the right attention to massive-

ly deploy geothermal in Europe. Now

it must quickly publish the Geother-

mal Action Plan to fast-track invest-

ments and reduce uncertainty, and save

families, businesses, industries and

farmers from the energy crisis.”

Meanwhile, Energy Storage Europe,

said it is key that energy storage is

being recognised not only as a decar-

bonisation enabler but as a strategic

competitiveness asset in the EU policy

framework.

“The recognition that energy storage

is no longer a side topic to renewables,

but a strategic infrastructure is a far

more powerful investment signal than

a narrow renewables policy,” it said in

a statement.

While the EU has a careful path to

tread in the coming months, that

pathway is clear – and there is no

going back. The drive for homegrown

energy is likely here to stay and it must

be clean.

Fatih Birol, Executive Director of

the International Energy Agency

(IEA), best summed it up in an inter-

view with the Guardian newspaper.

He said a key effect of the US-Israel

war on Iran was that countries would

lose trust in fossil fuels and demand

for them would reduce.

“Their perception of risk and reli-

ability will change. Governments will

review their energy strategies. There

will be a signicant boost to renew-

ables and nuclear power and a further

shift towards a more electried fu-

ture,” he said. “And this will cut into

the main markets for oil.”

Birol said there was no going back

from the crisis: “The vase is broken;

the damage is done – it will be very

difcult to put the pieces back togeth-

er. This will have permanent conse-

quences for the global energy markets

for years to come.”

Fragile: handle with care

Junior Isles

Cartoon by Jem Soar