Europe could save as much as €250 billion annually by speeding up the electrification of its industrial sectors, buildings, and transport networks. This shift would not only reduce dependence on expensive fossil fuel imports but also enhance the continent’s ability to support emerging technologies like artificial intelligence, thereby improving its position in the global economy. n nCurrently, energy costs in Europe are two to four times higher than in other major economies, largely due to reliance on imported fuels. This burden is particularly acute for energy-intensive industries, where high operating expenses affect profitability, investment capacity, and long-term competitiveness. By expanding the use of domestically produced renewable energy through electrification, the EU can strengthen energy independence and foster greater economic resilience. n nDespite being a leader in clean technology innovation, Europe’s progress in electrification has stalled, remaining at just 21% over the past decade. In contrast, China is projected to reach 35% electrification by 2030, highlighting a growing gap. To close it, Europe must prioritize demand-side strategies—focusing on how energy is distributed and consumed rather than solely on generation. n nIn industrial applications, integrating electrification with on-site renewable generation, battery storage, and digital energy management systems can increase operational flexibility and lower production costs. These technologies allow factories to adapt to variable renewable supply and optimize energy usage in real time. n nFor residential and commercial buildings, switching to electric heating systems such as heat pumps—paired with rooftop solar panels, stationary batteries, and smart controls—can cut ongoing energy expenses significantly. Studies indicate potential savings ranging from 15% to 80%, depending on building type and system configuration. n nOn the transportation front, widespread adoption of electric vehicles (EVs) could reduce drivers’ energy expenditures by over 25% in certain regions of Europe. This transition supports broader decarbonization goals while easing pressure on urban air quality. n nBeyond cost savings, flexible electrification enables faster deployment of distributed power generation, especially solar. It also helps manage peak electricity demand, reducing the need for costly grid upgrades and minimizing energy waste during periods of oversupply. These improvements contribute to a more stable and efficient power system overall. n nThe rise of AI presents both an opportunity and a challenge. Data centers are expected to double their electricity consumption to more than 230 terawatt-hours (TWh) by 2035, increasing total demand by up to 20% over the next ten years. However, grid bottlenecks and slow permitting processes threaten nearly a fifth of planned data center capacity in key hubs such as Dublin, Amsterdam, and Frankfurt. Proactive investment in grid modernization and renewable integration will be essential to sustain this growth without compromising reliability or climate targets. n nAccording to Schneider Electric’s Sustainability Research Institute, with the right regulatory framework—including effective implementation of the EU AI Act, the European Green Deal, and national energy strategies—Europe could see electricity demand for AI rise from 13 TWh in 2025 to 90 TWh in 2030 while maintaining low emissions and grid stability. n nUltimately, achieving a sustainable, competitive energy future depends on reducing overall consumption through smarter systems. Digital transformation in industry plays a crucial role here, enabling better energy efficiency and tighter cost management, allowing companies to produce more with fewer resources. n nEurope now faces a pivotal moment. The coming years could define a shift toward a cleaner, more resilient, and economically robust energy ecosystem—one that aligns technological advancement with environmental responsibility. Realizing this vision will require decisive policy action focused on accelerating infrastructure investment and advancing the electrification of energy demand, alongside strong leadership from the private sector in adopting integrated digital-electric solutions.
— news from The World Economic Forum
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Using electrification to boost European competitiveness
By accelerating electrification of its industry, buildings and transportation network, Europe could save €250 billion per year. n nThis would help Europe to better support the rapidly developing AI boom and boost its global competitiveness. n nEurope’s energy system can keep emissions low, support future demand and drive competitiveness, if the right regulations are in place. n nEurope is set to save €250 billion per year if it accelerates electrification. Doing so across industry, buildings and transport means integrating homegrown renewables more effectively. n nThis would reduce reliance on power from costly fossil fuel imports, which can cost Europe two to four times more than other major regions. It would also help to bolster energy investment generated within the EU itself. And it would establish greater energy sovereignty by providing more direct access to energy that’s so critical to building economic resilience. n nThe current energy import situation is placing a stranglehold on European industries, which impacts margins and constrains growth, investment and competitiveness. Employment in energy-intensive sectors is deeply tied to energy costs, which are particularly high in Europe due to expensive fossil fuel imports. n nAs a global leader in clean tech, Europe can innovate to accelerate the energy transition, decarbonize and build back its industrial strength. Alternatively, it can watch its factories age and dilapidate, falling further behind its global competition. n nSo, how exactly can and should Europe reinvest in energy transition progress? The answer lies in its ability to turn its greatest challenge into its greatest opportunity. n nEurope’s industrial and digital future n nElectrification is the backbone of Europe’s industrial and digital future. But Schneider Electric’s recent research shows the rate of electrification in Europe has stagnated. Stuck at 21% for the past decade, it is falling far behind other regions such as China, which is forecasted to reach an electrification rate as high as 35% by 2030. n nTo accelerate electrification and generate major economic value, Europe must look at the demand side, focussing on energy distribution and use, rather than production. n nFor industrial users, technology can make the difference. Combining electrification with local generation, storage and digital controls makes it flexible and able to leverage renewable-based, intermittent supply. This can make the cost of production more competitive. n nIn buildings, the same benefits of electrification apply, with much lower recurring energy costs from investing in heat pumps and combining them with rooftop solar, stationary storage and digital controls. Schneider Electric’s analysis suggests energy savings of between 15% and 80% in this case. n nFinally, electrification of road transportation through the adoption of electrical vehicles would reduce energy costs for drivers by more than a quarter in some parts of Europe. n nOverall, flexible electrification enables the accelerated deployment of power generation, especially through rooftop solar panels, which have huge potential in the EU. It also helps to mitigate peak demand issues, reducing the need for costly grid expansions and enabling the network to handle more usage. Finally, it reduces curtailment and helps to avoid price spikes, making the overall energy system far more efficient. n nBy bolstering energy sovereignty and cutting energy costs in this way, Europe can become more competitive globally and it would transform Europe’s energy system much faster. n nA sustainable path for the AI boom n nIf Europe is to keep up with developments in countries whose energy bills could be nearly five times cheaper, depending on fuel type, flexibility will be key. This will be critical to charting a sustainable course for artificial intelligence (AI) and unlocking this technology to enhance decision making, boost productivity and help reduce energy consumption and emissions. The rollout of AI technology is estimated to increase electricity demand by up to 20% over the next decade, with data centres projected to double their electricity consumption to over 230 TWh by 2035. n nBut Europe is hampered by grid congestion and slow permitting delays, which threaten a fifth of planned capacity in major data centre hubs like Dublin, Amsterdam and Frankfurt. This underscores the need for parallel investment in grid reinforcement, renewables and flexible resources. By building infrastructure ahead of demand, Europe can support AI growth while maintaining stability. n nSchneider Electric’s Sustainability Research Institute envisions a scenario in which Europe can welcome AI sustainability. It must be supported by EU regulation that is adaptive and ambitious, and firmly aligned with Europe’s climate and energy goals, including cohesive implementation of the EU’s AI Act, European Green Deal and national energy plans. If this happens, electricity demand could rise from 13 TWh in 2025 to 90 TWh in 2030, while maintaining grid stability and low emissions. n nKeeping carbon emissions low n nCreating an energy system that can support future demand and drive Europe’s competitiveness requires both electricity and regulatory adaptiveness. But it also means keeping carbon emissions low in the first place. n nUltimately, Europe can do more if it uses less. And the technology is readily available to make that a reality. Accelerating the digitalization of industry is a critical conduit for this and will be key to enabling energy efficiency and cost control so businesses can produce more, better. n nLoading… n nEurope stands on the precipice of a game-changing energy transition. The coming years will mark a decisive shift towards a cleaner, more resilient and more competitive energy ecosystem. n nThis will require bold, decisive policy that prioritizes and accelerates investment in grid infrastructure and supports the electrification of demand. It will also require industry leaders to supercharge their own energy transformation, embracing the convergence of electrification and digitalization to meet the surging demands of AI and more.