In the EU, companies have been grappling with a need to decarbonise their industrial processes, diversify their feedstocks and shift their energy mix to renewables while facing high and volatile energy costs and uncertain electricity supply. Similarly, energy suppliers and grid operators have struggled to cope with increased demand for clean energy due to funding barriers, limited access to clean technologies, a complex permitting process for energy projects and an aging grid infrastructure for electricity transmission and distribution.

The European Commission’s new Clean Industrial Deal, a multi-year plan targeting energy-intensive industries (EIIs) and the clean tech sector, published in February 2025, seeks to address these industry challenges by integrating decarbonisation initiatives into economic development. The deal outlines key actions to support clean energy, including measures to reduce energy prices, instruments to derisk investments in clean energy and provide more certainty to industrial customers, increase funding and speed up permitting for energy and grid infrastructure projects.

The actions published or announced in the Clean Industrial Deal with key implications for the energy sector, range from new guidance for Member States, proposals to revise existing legislation, to the creation of new funding mechanisms. At the moment, specifics on these initiatives are still largely unknown, and more details will emerge within the next two years as key regulatory milestones or decision points are reached. Nevertheless, despite the current uncertainty, companies can still consider some no-regret actions to reduce their energy costs, secure their energy supply or reduce their energy emissions as part of their energy strategy.

1. New EU developments can change the business case for investing in clean energy and boosting industrial electrification

The EU has set a 35% target for electrification of final energy use by 2030.ⁱ  However, as of 2023, the European economy had achieved less than 23% electrification.ⁱⁱ  Electrification is key for the transition, but achieving it requires a clean energy supply and infrastructure that can meet demand, and that is reliable and cost-effective. The EU aims to create the right conditions to strengthen the business case for companies to invest in clean energy and drive industrial electrification.

The Commission’s new Clean Industrial Deal seeks to diversify energy supplies and expand the generation of clean energy, mobilise private capital for grid modernisation and storage infrastructure and improve the connection of energy systems. The deal includes both short- and medium-term strategies to reduce energy costs. The Affordable Energy Action Plan, part of the EU Clean Industrial Deal outlines actions to reduce permit time for energy projects, address inefficiencies in the design of network tariffs, lower energy taxation and improve energy market integration.

Currently, it can take between three and nine years to deploy renewable energy projects due to red tape.ⁱⁱⁱ By H2 2025, the EU is planning to put forward legislative proposals to accelerate permitting; this will include grids, energy storage and renewables. In parallel, the Commission will work with Member States to accelerate their national permitting regimes. During Q3 2025, the Commission will seek to issue guidance, deploy implementation support, upgrade online permitting tools and expand renewable acceleration areas. Successful implementation of these initiatives will expedite permits in renewable acceleration areas, reducing the process to six months for simpler projects, and one to two years for more complex projects. Permit times for projects outside acceleration areas would not exceed three years. Once the Commission has published these initiatives, it will be possible to determine the potential timeframe for these changes to take place, although given their complexity it is unlikely that they will apply before Q1 2026 at the earliest.

To complement those grid initiatives, the Commission is planning to pilot a EUR 1 billion industrial decarbonisation facility using existing resources and auctions to support electrification projects in 2025. The ultimate goal is to create an industrial EU ETS, which is planned for next year. The facility would target capital and operational expenditures of projects. Furthermore, a new State aid Framework expected in Q2 2025 will seek to accelerate the deployment of renewable energy by evaluating state guarantees to ensure that they can incentivise private financing while reducing direct grants. The Commission is also planning to provide informal guidance to companies on the compatibility of projects aligned with EU priorities within decarbonisation and innovation with antitrust rules, and to issue guidance for mergers assessment by incorporating the impact of sustainability benefits into competition analysis. Then, during H2 2025 the Commission is planning to work closely with Member States to accelerate the design of new Important Projects of Common European Interest (IPCEIs) to support industrial decarbonisation and will establish a support hub to help launch projects. IPCEIs would then be supported by a planned European Competitiveness Fund to ensure these strategic sectors get access to finance.

Overall, these initiatives and funding are unlikely to result in benefits for companies during 2025. However, if they are successfully implemented, they should contribute in the medium term, together with the other initiatives outlined in this chapter, to an increase in the number and scale of energy projects in the EU. Therefore, an important milestone for companies to watch for is the launch of the support hub during H2 2025, as they will be able to engage directly with the Commission to help them navigate the opportunities being created by these initiatives.

Another EU initiative to address current investment barriers for energy producers to deploy new projects that increase clean energy capacity is the development of tripartite contracts during H2 2025. The contracts could include clean energy producers, the energy-consuming industry and the EU and Member States. Sectoral contracts for solar, hydrogen, offshore wind, or grids would target specific industry needs. Tripartite contracts should increase investment by reducing market uncertainty risks through predictable regulatory measures, such as specific timelines of auctions for clean energy projects and tender designs that balance resilience, security and sustainability considerations. Planning and funding initiatives will be complemented by further electrification targets. The Electrification Action Plan is expected to set EU electrification targets for the medium (2040) and long term (2050) and speed up the development process for electricity grids.

In summary, these initiatives should improve the investment case for companies investing in clean energy projects in the medium term. For energy suppliers, the approval process for clean energy projects should be reduced significantly, and obtaining financing for these projects should be easier, resulting in increased clean energy capacity in Europe. Companies should also have more regulatory certainty to plan for the medium term, derisk finance and deploy clean energy projects. Energy buyers should have more certainty in terms of electrifying their industrial processes, more stable and lower energy costs, and be able to reduce their scope two emissions even further. New clean energy capacity should reduce their investment risks by ensuring that they can meet their increased electricity demand.

Key actions for companies to start to consider:

• Understand the improved funding landscape for clean energy projects and identify suitable funding options (including subsidies, grants or tax incentives).
• Once the EUR 1 billion pilot facility is in place later this year, and as more clarity on additional short-term funding emerges, assess how they can support industrial electrification projects. As part of this assessment, companies could explore how they can leverage existing net zero technology solutions such as industrial heat pumps, electric boilers, induction and resistance heating, thermal storage or waste heat to implement these projects.
• Energy buyers could undertake no regret actions such as setting renewable energy and electrification goals, and strategies with clear targets and key performance indicators (KPIs) that are aligned with current and upcoming EU goals. These actions could help them reduce their emissions and emissions-related costs by shifting their energy use from fossil fuels to renewables and reducing the use of energy generated from fossil fuels for industrial processes.

2. The EU will prioritise grid upgrades and reducing high energy costs to increase certainty for companies

The Commission recognises that having a reliable grid is essential for the transition. However, there are significant limitations in grid infrastructure that need to be addressed now, given how long it takes to deploy grid projects. Grid infrastructure needs to be revamped to absorb and then distribute additional electricity capacity, including increased electricity demand from electric vehicle (EV) infrastructure and industrial electrification. Grid operators need to plan grid projects well in advance, as deploying grid projects can take between five and seven times longer than renewable energy projects.^iv That means that grid projects need to start now to meet renewable energy demands in 2040.

According to EU estimates, almost EUR 600 billion are needed for investments in electricity grids for infrastructure and upgrades through 2030^v and over EUR 3 trillion by 2050.^vi However, the funding for these investments has not been committed. On top of this, cross-border capacity needs to be increased. To achieve an integrated and interconnected energy market, the Commission will continue its efforts to complete the Energy Union. The Energy Union will prioritise full integration and interconnection in Europe to reduce volatility and bring high energy costs down.

During H2 2025, the Commission is seeking to launch an Energy Union taskforce to strengthen the governance of the electricity system, and a Clean Energy Strategy to mobilise private capital for the energy transition. In Q3 2025 the Commission is planning to introduce a package to strengthen the social dimensions of the Energy Union to give consumers more flexibility to change energy contracts and to produce, use and sell renewable energy through energy communities. Then, in Q1 2026, the European Grid Package will be put forward to build on the existing Grid Action Plan from 2023 to accelerate the expansion, modernisation and digitalisation of grids and help to make the Energy Union a reality. The package will also seek to simplify cross-border integration, planning and project delivery, especially for interconnectors. For example, there is currently a need to increase interconnectivity between the Iberian Peninsula and the rest of Europe, or the Baltic States and Central and Northern Europe, and to create an integrated offshore network in European Northern Seas. The objectives are to give grid operators and energy suppliers more regulatory certainty and improve investment conditions for grid upgrade projects to support industry electrification. However, these initiatives are expected to take more than two years to be published, and, once agreed, may not be fully implemented before the end of the current Commission’s mandate. It is also currently unclear how much the plan will contribute to meeting the level of investments needed in the grid.

Besides market integration, other areas to watch are EU developments targeting the pricing model of renewables. Lower clean energy prices, if achieved, are likely to create more certainty for companies looking to electrify their industrial processes and reduce their emissions. EU reforms in 2025 will target high energy costs for companies, and include both renewables and non-renewables. The Affordable Energy Action Plan, published in February, seeks to reduce energy costs by providing incentives for demand flexibility, and redesigning tariffs to allocate costs better throughout the energy system.

Current market rules for the power sector do not decouple the price of renewable energy from volatile fossil fuel prices, which prevents users from benefiting from clean energy prices. For example, in 2022, natural gas set wholesale electricity prices 63% of the time, despite representing only 20% of the energy supply. By decoupling clean energy prices, once it is politically and technically feasible to do so, the cost of renewables, which have been falling faster than the cost of fossil-fuel electricity generation,^vii  would become cheaper than fossil fuels.

The Commission has acknowledged in the Industrial Deal that natural gas is expected to continue to be the main price setter for electricity in the coming years. However, the introduction of guarantees, State aid, electricity flexibility and risk reduction instruments such as PPAs and Contracts for Difference (CFDs), could still help decrease energy prices in the short term.

PPAs are currently available under the recent EU Electricity Market Reform.^viii  The EU, through the Affordable Energy Action Plan, is planning to expand the use of guarantees and risk reduction instruments such as CFDs. You can read more about CFDs in this Deloitte analysis. During H2 2005 the EU is expected to launch a pilot EUR 500 million programme together with the European Investment Bank (EIB) for corporate PPAs. The programme, targeted for EIIs and small and midcaps, will offer counter-guarantees for medium-term purchases of renewable energy. By Q4 2025, the Commission will also provide guidance to Member States to combine PPAs and CFDs in line with State aid rules. In addition, in Q4 2025, the Commission will seek to issue guidance on energy flexibility in retail contracts, so that the industry can, on a voluntary basis, participate in the integration of the energy system. To complement these measures, in Q4 2025 the EU plans to issue guidance to Member States to reduce taxes on electricity and eliminate levies that are non-energy related, such as those included in energy bills or network charges. To reduce network charges, during H2 the Commission will also provide recommendations and guidance for tariff methodologies. It should be noted that while guidance unrelated to the implementation of Directives is not binding, Member States have an incentive to engage with the Commission, as lower energy prices would reduce energy costs across the economy.

Then, in the medium term, investments in renewable energy capacity and reliable transmission and distribution could achieve further decreases in electricity costs. EU analyses show that increasing renewable electricity can reduce prices significantly. For example, in the Iberian Peninsula, forecasts estimate that 80% of renewables penetration in 2030 could reduce prices by approximately 50%, as compared to 2019 levels.^ix

All these measures are likely to help developers of renewable energy projects to derisk their projects, and provide more revenue stability, which in turn will provide more energy security for industrial customers.

Key actions for companies to start to consider:

• Energy suppliers should work closely with industrial and commercial customers to understand their current and future electricity needs. Grid operators should also work with these stakeholders to adjust planned grid capacity and ensure it can absorb increased electricity supply and meet future demand.
• Conduct scenario analysis to evaluate how lower energy prices resulting from shorter-term EU policy interventions, assuming they succeed, could improve the business case for electrification and full migration to renewable energy.
• PPAs are now available under last year’s Electricity Market Reform. While PPAs face some potential implementation barriers, including complexity to negotiate and reduced availability due to lack of market of maturity, companies can assess if PPAs have the potential to secure renewable energy supply and reduce cost-related uncertainty and risk. If PPAs prove viable, companies can track implementation of new measures for medium-term PPAs, assess suitability, and then work with energy suppliers to conclude suitable contracts.
  

Key legislative and policy measures

Figure 1. Energy in the EU in 2025, key legislation and policies for the next 12 months

Acknowledgements:

The author would like to thank Giorgio Consoli and Ramon Bravo Gonzalez for their contributions to this article.

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1. EU Electrification rates are not on track for 2050: time for an Electrification Action plan, eurelectric, 5 April 2024.

2. State of the Energy Union Report 2024, European Commission, 11 September 2024.

3. The future of European competitiveness: Part A | A competitiveness strategy for Europe, Mario Draghi, 9 September 2025, p. 34.

4. Energy transition: the road to scale, Deloitte.

5. Grids, the missing link - An EU Action Plan for Grids, European Commission, 28 November 2023.

6. Making the EU Electricity Grid Fit for Net-Zero, European Commission, 16 April 2025.

7. Policy Brief: Decarbonising for competitiveness: four ways to reduce European energy prices, Bruegel, 5 December 2024.

8. The future of European competitiveness: Part A | A competitiveness strategy for Europe, Mario Draghi, 9 September 2025, p. 40.

9. What if electrification transformed the EU economy?, European Parliament, September 2024.