Europe needs more than 660 billion euros a year of investment to bring power costs down

The European Union is seeking to cut its high energy costs and rebuild its industrial competitiveness through large scale investment in domestic power generation and renewables. According to a report published on Sunday, 2 August 2026, the International Energy Agency has said European electricity prices are now about 50 percent higher than in China and twice the level in the United States.

The EU plans to raise the share of renewables from about 26 percent today to at least 42.5 percent by 2030, and to lift electricity to 46 percent of final energy consumption by 2040. Delivering that plan requires annual investment of more than 660 billion euros through to 2040. The European Commission estimates the path could cut roughly 260 billion euros a year from fossil fuel import costs, against the roughly 450 billion euros a year the bloc has spent on fossil fuel imports since the 2022 crisis.

The current pressure traces back to the jump in energy prices after Russia's invasion of Ukraine in 2022. At the peak of that crisis, gas prices passed 260 euros per megawatt hour in August 2022, and Europe replaced long term pipeline contracts with more expensive liquefied natural gas imports. The shift hit energy intensive industries including chemicals, fertiliser, aluminium, steel, cement and paper. The need for cheap power has been sharpened further by the spread of artificial intelligence: the United States holds more than 50 percent of global data centre capacity, China about 30 percent and Europe only 12 percent.