On Monday 18 May, the Agency for the Cooperation of Energy Regulators (ACER) published a policy paper exploring how the costs and benefits of cross-border infrastructure projects could be shared within the European Union. The Energy Union “aims to create a fully integrated and competitive internal electricity market. [...] In recent years, it has become increasingly apparent that significant additional investments in electricity infrastructure are needed to meet this objective”, according to the organisation.
Currently, the instruments governing infrastructure cost-sharing between Member States are the Trans-European Networks for Energy policy (TEN-E, which sets out the conditions for accessing funding, including the Connecting Europe Facility), the Congestion Income Distribution process, the Inter-TSO Compensation mechanism for States hosting transit flows and the Cross-Border Cost Allocation framework.
Mismatch between needs and proposed projects. ACER identifies several gaps in the functioning of these instruments. One of these is the discrepancy between estimated infrastructure needs and the projects actually proposed, the latter falling short of the former. The European agency concludes that a more effective multilateral framework for sharing infrastructure costs is needed to make the construction of such infrastructure more attractive.
This would have a positive effect on fostering greater integration of the European market, according to ACER, as “some Member States have in fact reported a lack of such multilateral cost-sharing framework as one of the reasons for not proposing and developing infrastructure projects beyond national need”.
Among other shortcomings identified by the agency are the absence of incentives for cross-border infrastructure, the insufficient allocation of infrastructure costs among the Member States that benefit from them, the failure to cover the full range of network costs, including both investment and operating expenditures, as well as the need for a predictable, transparent and sustainable mechanism.
The ‘Grids Package’ as a potential response. The agency evaluates five scenarios for amending existing regulations, ranging from a simple improvement in the functioning of the three existing mechanisms to their replacement by a new European framework, established through a common fund for investment in regional or European infrastructure.
ACER asserts that a more in-depth quantification of the scenarios is required before issuing a definitive recommendation, and points out that the ‘Grids Package’ currently under discussion in the EU Council (see EUROPE 13870/7) could address some of the identified shortcomings.
See the ACER policy paper: https://aeur.eu/f/lyn (Original version in French by Nadège Delépine)