Europe’s retail energy markets and the shift to electrification: prices, affordability and consumer flexibility
Europe’s retail energy markets and the shift to electrification: prices, affordability and consumer flexibility
What is it about?
As Europe moves towards greater electrification, retail energy markets will increasingly shape the costs and opportunities for consumers. How electricity is priced and how consumers can respond to changing prices will influence whether households can benefit financially from this transition.
The 2026 Monitoring Report on retail energy markets examines electricity bills, affordability and what the shift to electrification means for consumers.
What trends did the monitoring find?
Household retail prices rose sharply after the 2022 energy crisis and have remained elevated. In 2025, EU households spent an average of €840 on electricity and €1,170 on gas.
Household electricity expenditure ranges from 1.2% to 3.9% of national median income across the EU, reflecting differences in prices, consumption and household income.
High electricity-to-gas price ratios can weaken the incentive to electrify. Electricity remains relatively expensive compared to gas, discouraging households from switching to electric technologies. Network charges, taxes and upfront costs often widen this price gap further.
Most consumers are not exposed to the benefits of flexibility. 7% of EU households are on dynamic price contracts, while over 80% in nine countries are on single fixed-term, fixed-price electricity contracts. This limits their exposure to changing price signals and potential savings. Smart meter rollout is also uneven across Member States: 66% of monitored customers have a smart meter, but coverage remains below 20% in several countries.
Flexible consumption could reduce bills. ACER analysis shows that switching to dynamic pricing and shifting consumption to lower-price periods could have saved households an average of 20% (around €120) on their electricity bills in 2025.
Better contract monitoring is needed to assess consumer outcomes. More complete and comparable contract data are key to assessing market impacts on European consumers.
Looking ahead
Electrification will increase electricity consumption and change when and how consumers use energy, creating new challenges for retail energy markets.
Three areas will be particularly relevant:
Making electrification financially attractive. Retail electricity prices relative to fossil-fuel prices, technology efficiency and upfront investment costs will shape incentives to electrify.
Ensuring network investment delivers value for consumers. Efficient planning and use of existing grids will help contain costs and protect electricity affordability as network investment increases.
Enhancing monitoring of energy retail contracts to understand consumer choice. Better data on the contracts consumers actually choose will help assess whether appropriate price signals and choices are available as consumption patterns change.