For decades, electricity was treated as background infrastructure — a neutral utility enabling economic life. That perception has fundamentally changed. Today, electricity has become Europe’s most strategic industrial input, shaping where factories are built, which industries remain competitive, and whether Europe can realistically pursue ambitions in metals processing, chemicals, advanced manufacturing, and electrification. Power is no longer a secondary cost factor; it is a decisive driver of industrial geography. The Energy Crisis Revealed a Structural Weakness
Europe’s recent energy crisis exposed a reality long underestimated: industrial competitiveness depends on electricity stability and price predictability. Regions that aspire to host smelters, refiners, hydrogen-based steelmaking, chemical conversion or large-scale manufacturing cannot operate power systems purely as social or environmental tools. When electricity prices became volatile, metal plants shut down, chemical production was curtailed, aluminium smelters idled and investor confidence deteriorated. What appeared to be a temporary shock revealed a deeper imbalance — Europe treated electricity as policy, while competitors treated it as industrial strategy.
The risk Europe now faces is structural rather than cyclical. If price uncertainty becomes normalised and industrial power demand is treated as just another stakeholder interest, strategic industries will erode gradually. This will not happen through dramatic collapse, but through delayed investments, silent closures, underutilised capacity and relocation. Europe risks pursuing electrification goals while simultaneously pushing away the very industries needed to process and manufacture electrified systems.
Why Industrial PPAs Are Not Enough
Industrial power purchase agreements (PPAs) have emerged as a partial response, offering long-term price visibility and supporting renewable integration. Yet they are not a systemic solution. PPAs mainly serve large corporates with strong balance sheets, leaving smaller processors and regional industrial clusters exposed. Electrifying heavy industry requires a comprehensive framework, not isolated contracts. Without it, renewable expansion delivers fragmented benefits instead of a durable industrial advantage.
At the core lies electricity market design. Wholesale pricing models built for liberalisation do not automatically support reindustrialisation and strategic autonomy. Europe must ask whether purely market-based price formation can underpin a continent attempting to decarbonise, rebuild industry and secure supply chains simultaneously. This does not mean abandoning markets, but recognising that strategic industry needs zones, long-term contracts and governance models where electricity behaves like a predictable industrial input, not a speculative commodity.
Electricity strategy is incomplete without grid infrastructure. Power availability determines not only cost, but feasibility and location. Congestion, connection delays, spatial mismatches between renewable generation and industrial demand, and insufficient transmission capacity increasingly dictate where industry can operate. If grids lag behind policy ambition, electricity shifts from enabler to constraint, reshaping Europe’s industrial map in unintended ways.
Europe is not energy-homogeneous. Some regions are structurally better positioned to host electricity-intensive activity due to generation mix, grid topology and resource availability. Pretending otherwise is a strategic mistake. A credible industrial strategy must deliberately anchor power-intensive industries in geographies where electricity can sustainably support them, rather than forcing uniformity through policy abstraction.
South-East Europe as an Execution Geography
Within this logic, South-East Europe emerges as a natural execution zone. Hydropower capacity, renewable potential, improving interconnections and available industrial land position the region to host electricity-intensive processing and manufacturing. Properly integrated, SEE can stabilise power-hungry value chains inside Europe’s industrial perimeter, preventing offshoring driven by electricity economics.
Treating electricity as a raw material transforms how Europe must evaluate trade-offs. Decisions on ETS design, capacity mechanisms, grid investment or renewable incentives are no longer just energy choices — they are industrial policy decisions. Europe cannot credibly pursue strategic autonomy while allowing electricity economics to remain fragmented, volatile and politically improvised.
Europe now faces a clear choice. Electricity can become its greatest industrial weakness — unstable, politicised and unpredictable — or its defining advantage, anchoring metals processing, chemicals, manufacturing, recycling and electrified infrastructure. The difference lies in whether Europe fully accepts electricity as an industrial material and designs policy accordingly. If it does, a competitive, decarbonised industrial system remains possible. If it does not, electrification will advance alongside deindustrialisation — an outcome Europe cannot afford.
Elevated by Clarion.Engineer
