Cheaper electricity across Europe just got a little further away. EU governments have watered down Brussels’ plan to fund the cross-border power grids that would bring more renewable energy and lower prices to homes and businesses. Instead, national capitals secured more control over the money in exchange for a slower rollout.
Member states stopped short of supporting the Commission’s original plans. Those plans would have redirected a larger share of cross-border grid revenues towards new European energy infrastructure. Countries did back measures to modernise electricity networks and accelerate renewable energy deployment. Meeting on Friday, EU energy ministers agreed their negotiating position on the European Grids Package.
“Today’s agreement paves the way for Europe’s electrification towards achieving climate neutrality,” Cyprus’ Energy Minister Michael Damianos said after the meeting. “By fast-tracking permitting and enhancing interconnections – including ending energy isolation for member states – we are securing affordable, clean energy and bolstering energy security for all European citizens.”
National priorities
The biggest sticking point proved to be the financing of new cross-border electricity infrastructure. The Commission had proposed requiring transmission system operators to dedicate 25 per cent of unused congestion income to projects that reduce bottlenecks between member states. Congestion income is revenue generated when electricity transmission capacity between bidding zones is constrained.
Under the Council compromise, member states would instead gradually allocate part of those unused revenues to cross-border projects, starting at 10 per cent in 2028 and rising to 25 per cent by 2031. The agreement represents a less ambitious approach than the Commission originally proposed, reflecting governments’ reluctance to surrender control over national grid revenues.
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Several governments argued it would reduce their flexibility to spend the money on national priorities. Sweden, in particular, had voiced concerns about congestion revenues. During a parliamentary debate, Swedish MEP Sofie Eriksson (S&D/SWE) said Sweden risked paying an unfair amount under the original proposal.
Faster permitting
Alongside the funding compromise, member states backed measures to accelerate the rollout of new electricity infrastructure. Electricity could account for around 60 per cent of the EU’s final energy consumption by 2050, compared with roughly a quarter today, according to the Commission. As transport, industry and heating become increasingly electrified, Europe needs stronger and more interconnected grids capable of integrating rapidly expanding renewable energy generation.
Today’s agreement paves the way for Europe’s electrification towards achieving climate neutrality.
— Michael Damianos, Cyprus’ Energy Minister
Permitting remains one of the biggest obstacles to expanding Europe’s electricity networks. Transmission grid projects can take up to a decade to complete. That delays renewable energy projects and stops consumers and businesses benefiting sooner from cheaper electricity.
The package would streamline permitting procedures by introducing digital one-stop shops for permit applications. Electricity grid and renewable energy projects would also be recognised as serving an overriding public interest.
The European Parliament’s Industry, Research and Energy (ITRE) committee is expected to adopt its negotiating position on the permitting proposal this week. MEPs have repeatedly argued that lengthy permitting procedures are weakening Europe’s competitiveness and slowing the clean energy transition.
