Schneider Electric: How Electrification Could Unlock €250bn

Electrification is increasingly recognised as the cornerstone for achieving both climate neutrality and economic resilience.

Yet despite its potential to deliver growth, security and competitiveness, Europe’s electrification progress remains sluggish.

The continent’s electrification rate has stagnated at approximately 21% — a figure that has barely shifted in a decade — compared with China’s 31% surge over the same period.

European consumers are also feeling the cost of inaction.

Average household electricity prices sit around €0.27 (US$0.31) per kWh, significantly higher than €0.15 (US$0.17) in the United States and just €0.08 (US$0.09) in China, meaning EU citizens face electricity costs that are roughly three times higher than their Chinese counterparts.

This economic imbalance reinforces the urgent need to accelerate the continent’s electrification agenda — not only to decarbonise and meet climate targets, but to lower costs and boost energy security.

Schneider Electric’s latest report, 'Europe energy security and competitiveness – supercharging electrification', calls for decisive policy and business action to break through the continent’s current energy impasse.

“Europe keeps facing a clear energy trilemma, which combines the need to decarbonise its energy system with growing concerns on energy security and affordability,” says Laurent Bataille, Executive Vice President, Europe Operations at Schneider Electric.

“While progress on the former is strong, with 37% reduction in emissions since 1990, the EU continues to rely for nearly 60% of its energy supply on foreign imports, an annual spend of €380bn (US$440.2bn) and the cost of energy within the EU is 2-5 times that of the US and China, a clear drag on its economic and industrial development.”

The cost of electrification inaction

According to the report, Europe could save €250bn (US$289.7bn) annually by 2040 through faster, more strategic electrification.

While Nordic countries lead in transport and building electrification, progress in other regions remains uneven, constrained by policy and funding gaps. Southern Europe has made advances in residential efficiency, while Western and Central Europe are increasing industrial electrification and growing prosumer participation.

To turn ambition into action, Schneider Electric outlines key policy levers — from phasing out fossil fuel subsidies and reforming tax structures to incentivize clean power, to fostering innovation funding, emission trading reforms and local value creation.

The company also urges sector-specific measures such as mandating electrification in new buildings, industrial processes, and accelerating the uptake of electric vehicles and heat pumps.

“China has embraced this plan for a decade,” the report states. “Results are, as discussed, staggering. The EU has the potential, skills, financial depth, and resources to execute this plan and beyond, and secure a long-term economic and political leading influence at global level. It needs to embrace modernisation.”

The role of procurement and manufacturing

Sustainable procurement and manufacturing are central to this transition, with public procurement policies that prioritise electrified solutions and reinforce local production chains. “Policy must incentivise and businesses must drive implementation to unlock the economic and environmental gains we need to see today,” adds Laurent.

Rapid deployment of new infrastructure, enhanced R&D collaboration, and simplified permitting processes will be key to strengthening Europe’s energy resilience. At the same time, fostering prosumer participation — allowing consumers to generate and trade electricity — will create more flexible and responsive markets.

The future of European electrification

The report gives a roadmap centred on four key actions: narrowing the price gap between electricity and gas, increasing financing mechanisms, creating a vibrant electrification market, and ensuring development is localised within the EU.

“This landmark research provides one of the most comprehensive analyses to date of Europe’s electrification potential and the policy actions needed to realise it,” says Laurent.

“It underscores that electrification is vital – not only for achieving our climate ambitions, but for driving economic growth, energy independence and industrial competitiveness. Europe must break free from electrification stagnation urgently.

"The technology is here, ready to deploy. Now, policy must incentivise and businesses must drive implementation to unlock the economic and environmental gains we need to see today.”