The European Commission has called on EU Member States to reduce electricity taxation to make electricity more affordable for households compared with gas, in its Citizens’ Energy Package published on March 10. The package says countries should remove non-energy-related costs from electricity bills and use existing flexibilities in EU legislation to lower VAT and excise duty rates.
According to the European Commission, these measures could reduce household electricity bills by up to 14%, or around €200 per year on average [about $220]. The European Heat Pump Association said it has long argued that electricity prices should be no more than twice the price of gas to make heat pumps competitive.
EHPA also said a recent report found that countries taxing electricity more heavily than gas see slower heat pump adoption and remain more dependent on fossil fuels. By contrast, it said countries that keep electricity taxes lower and apply a stronger price signal on fossil fuels achieve significantly higher heat pump uptake.
The association welcomed the Commission’s focus on flexible electricity use and financing models including social leasing and energy-as-a-service, saying these can help households manage upfront costs and access efficient heating. The Commission’s proposals also come as nearly 10% of Europeans were unable to adequately heat their homes in 2024.
“The electricity-to gas price imbalance has long needed fixing, and it is great that the European Commission now says so,” said Jozefien Vanbecelaere, Policy Director at the European Heat Pump Association. “It is now crucial that Member States act to make electricity the obvious and affordable choice for households.”
