Summary: Revised TEN-E Regulation – future financing of European energy infrastructure

The European Commission has announced this week a proposed revision of the Trans-European Networks for Energy Regulation (the TEN-E Regulation). The revision aims to bring European energy infrastructure in line with the EU’s new climate targets and the European Green Deal. Changes in technology and ambitions have required new infrastructure categories along with changes to the related regulatory framework, processes and incentives.

The TEN-E Regulation is seen as a central instrument for the further development of an internal energy market and its revision is necessary to aid in achieving the objectives of the European Green Deal. The objectives of the TEN-E Regulation remain largely valid, yet the current framework in the TEN-E Regulation does not fully reflect the expected changes to the energy system as a result of new political contexts and, in particular, the updated EU green targets for 2030 and carbon-neutrality target for 2050.

The key revisions as set out in the proposal are:

• Smart grids – The criteria for smart electricity grids have been updated in line with technological changes in recent years, and to include potential innovations and digital elements.
• Gas – There is an increased focus on renewable and low-carbon gases, such as biogas, biomethane and hydrogen, through the creation of a new category of infrastructure for smart gas grids. Hydrogen networks and power-to-gas facilities above a certain threshold with a cross-border relevance will be included in the revised TEN-E Regulation.
• Projects of common interest (PCIs) – An additional selection criterion for PCIs has been added to include PCIs that demonstrate sufficient socio-economic benefits for at least two Member States and at least one third country. To reflect the objectives set in the European Green Deal, cross-border oil pipelines will no longer be eligible to be a PCI. In the preparation of Union PCI lists, the revised TEN-E Regulation includes a mandatory sustainability criterion for all infrastructure categories with at least one other criterion (e.g. market integration, security of supply, competition) at the stage of project selection. ACER and the European Commission will have a greater role in the identification of PCIs due to the need for independent validation.
• Permitting procedures – Competent authorities will need to coordinate and find synergies with neighbouring countries when developing procedures. This is in order to avoid additional requirements or legislative amendments during the permitting process and to accelerate the permitting stage. An 'offshore one-stop shop' is introduced to simplify and expedite the process for offshore grids for renewable energy. There is a greater transparency obligation on project promoters.
• Financing – Provisions on cost allocation have been revised to increase transparency and clarity and in order to accelerate investment. PCIs will remain eligible for EU financial assistance, but only those investments located in the territory of the EU will be eligible for financial assistance from the Connecting Europe Facility in the form of grants for works under specific conditions.

It is not clear yet when exactly the proposed new rules will enter into force and this will largely depend on negotiations with the European Parliament and Council. The fifth PCI list due to be published at the end of 2021 will follow the existing TEN-E Regulation with added sustainability assessment.

For further detail on the proposal for the revised TEN-E Regulation please read our other HSF Energy Notes article here.