A new analysis by Goldman Sachs, reported by Investing.com, examines one of Europe's biggest economic questions: who will finance the massive expansion of electricity infrastructure needed for electrification and AI? The report estimates that Europe will require €2.2 trillion to €3.5 trillion in power-system investments over the next decade to support electric vehicles, heat pumps, renewable energy integration, and rapidly growing AI data centers. While these investments are substantial, Goldman argues that the impact on consumers is likely to be more moderate than many fear.
The report projects that household electricity bills across the EU and the UK will rise by about 2% per year through 2035 under a base-case scenario. If electrification and AI infrastructure expand more rapidly than expected, annual increases could reach around 4%, which is still below the average 5% yearly increase households experienced over the past decade. Consumers will fund part of the investment through electricity charges, but approximately 35–40% of planned spending is expected either to have little effect on bills or to reduce costs over time. Investments in renewable generation, for example, could lower wholesale electricity prices, while routine grid maintenance has limited inflationary impact.
Another important finding is that higher electricity demand may actually improve system economics. As more households adopt electric vehicles, heat pumps, air conditioning, and electric heating—and as AI data centers consume more electricity—the fixed costs of operating the power grid can be spread across a much larger customer base. This could reduce network costs per unit of electricity. However, the impact will vary by country. Germany and the UK are expected to experience larger bill increases because of significant grid investments, while Italy and Spain may see relatively stable electricity prices due to slower grid-fee growth and declining wholesale power costs.
The report concludes that the biggest beneficiaries of this investment cycle are likely to be utilities, grid operators, and electrical equipment manufacturers, which Goldman describes as entering a potential industry earnings "super-cycle." It also argues that although households will consume considerably more electricity after fully electrifying transport and heating, their overall energy spending could decline by roughly 30% (around €1,200 per family annually) because lower spending on petrol, diesel, and natural gas would more than offset higher electricity bills. In this view, AI and electrification require enormous upfront investment, but the long-term economic benefits could outweigh the additional infrastructure costs.
