EC seeks reduction in electricity-to-gas price ratios
19th July 2026
EUROPE: The European Commission is asking member states to bring down domestic electricity-to-gas price ratios to a maximum of 2.5 and to a maximum of 2 for industry by 2030.
It is one of a number of measures contained in the European Commission’s recently published Electrification Action Plan to make Europe the first electro-powered continent.
The Action Plan wants heat pump installations to increase to 4 million per year by 2030, from 2.4 million in 2025. To ensure there is sufficient demand, it sets out measures including improving electricity-to-gas price ratios, ensuring electricity is taxed no higher than gas, supporting flexibility and accelerating industrial electrification.
The average electricity-to-gas price ratio across Europe is over 3x higher for electricity per kWh. In only two member states is electricity less than twice as expensive as gas. The Action Plan observes that a high ratio directly stifles demand for electric alternatives like heat pumps. Records show that member states with the lowest electricity-to-gas price ratios achieve triple the heat pump sales compared to member states where the ratio exceeds three.
“When electricity costs are over 2/2.5 times more than gas, the economic case to switch to heat pumps or other electric processes diminishes significantly,” the Action Plan states.
“In some industrial processes, electrification with heat pumps leads to cost savings if the electricity-to-gas price ratio is between 2.5 and 3.5. These efficiency gains lower energy system costs, reducing energy prices for all users, and benefitting the whole economy.”
It insists that member states should not tax electricity more than gas; currently in many countries, electricity is taxed multiple times more than gas.
Recognising that electrification requires a smarter and more flexible energy system, the Commission proposes measures to reform network charges, accelerate smart meter deployment and better integrate heat pumps into demand response markets.
The Action Plan also recognises that around 60% of industrial fuel-based energy demand can be electrified using heat pumps and backs this with support through the Industrial Decarbonisation Bank, a second Innovation fund industrial heat auction, sector-specific electrification roadmaps and investment in grid connections, thermal storage and energy management systems.
With industrial waste heat recovery estimated at a potential 300TWh/year, the Commission intends to launch an initiative to supply 11% of EU heat demand from waste heat recovery by 2050. This would include district heating and cooling (DHC) networks growing 6-7% per year and supplying 15% of total heating and cooling by 2030.
European Heat Pump Association (EHPA) policy director, Jozefien Vanbecelaere, described the Action Plan as a game-changer. “For the first time it focuses on boosting electrification of demand – and does so via a great line-up of measures, from tackling energy taxation and electricity prices and tapping on heat pumps’ flexibility, to supporting industrial electrification and waste heat recovery.
“To ensure it delivers, the European Commission must swiftly convert it into legislation and measures to enact at national level. EU governments should then pull together on implementation in order to score greater energy security, electrification and lower bills.”
