EU agency proposes extensive revision of legal framework for electricity grids

The European Union Agency for the Cooperation of Energy Regulators (ACER) has proposed ways to improve and simplify the legal framework for European grids. The document, which follows the European Commission’s forthcoming package of measures, highlights problems in scenario planning, the assessment of infrastructure needs and the selection of projects of common interest. At the same time, the Czech government has launched the first call under the ELEGRID programme, intended to support the modernisation and strengthening of the resilience of the Czech electricity system.

The document published by ACER reflects the forthcoming European Grids Package. The European Commission intends to publish it by the end of this year. In advance, it therefore invited experts to submit input through open consultations on the related legal framework.

ACER’s recommendations primarily concern grid development itself rather than permitting processes or financing. The revision of the TEN-E Regulation (EU/2022/869) is structured around four key thematic areas: the development of grid scenarios, the identification of infrastructure needs, the selection process for projects of common European interest, and the assessment of investment applications and cost-sharing mechanisms. This is not a legally binding document, but rather an ACER opinion addressed to EU lawmakers and other stakeholders.

Development scenarios

Within the first category, ACER identified persistent delays, limited transparency, conflicts of interest and inconsistency with national energy and climate plans (NECPs) as problematic.

According to ACER, the current scenario development process introduces additional complexity because, alongside the agency itself, it involves multiple actors – the European Commission, Member States and the European Scientific Advisory Board on Climate Change. It therefore proposes strengthening its own powers in its role as regulator, or alternatively those of the European Commission.

The five-year NECP cycle does not align in timing with the Ten-Year Network Development Plan (TYNDP), which is updated every two years. Transmission system operators provide the data for development scenarios, but it is not sufficiently validated. The agency would like to address this discrepancy by aligning the timelines and making relevant data publicly available.

In addition to the central scenario, the recommendations document also discusses creating a second scenario called “Trends and projections”. This alternative would reflect actual progress towards meeting policy targets. ACER wants it to be used for electricity, gas and hydrogen, and updated in line with the European Resource Adequacy Assessment (ERAA).

Infrastructure development

The ongoing energy transition requires accelerated development of transmission and distribution infrastructure. Legislation stipulates that, when assessing infrastructure gaps, European electricity and gas transmission system operators (ENTSO-E and ENTSOG) should give preference to alternative solutions over new construction, but in practice they do not fully apply this principle.

To prevent unnecessary investment, ACER proposes that, for every measure assessed under the TYNDP, the relevant entities should first demonstrate whether and how they considered alternative solutions. So-called non-wire, or non-investment, solutions can increase capacity more quickly and at lower cost.

It is therefore important, in its view, that the methodology for assessing needs should not be solely in the hands of network operators (ENTSO-E and ENTSOG), but should be approved by an independent entity, such as ACER itself. ACER can also increase transparency by publishing an analysis of unit investment costs and thereby promote the sharing of best practice across Europe.

Selection of projects of common European interest

Projects of common interest (PCIs) are intended to help EU Member States achieve the targets they have adopted as binding. The identified problems related to electricity grid development concern both implementation and shortcomings in the current regulatory framework.

The large number of regional working groups complicates coordination and the fair assessment of projects, thereby increasing the administrative burden. The uniform approach applied to projects at different stages of maturity may lead to insufficient consideration of risks, costs and financing needs.

Following the identification of infrastructure needs itself, there is no systematic reservation of the necessary capacity or verification that the selected projects will genuinely address all identified shortcomings.

ACER therefore recommends organisational changes to replace the existing 14 priority corridors and areas with four Europe-wide thematic groups: onshore and offshore electricity transmission corridors, hydrogen corridors, smart electricity grids and smart gas grids. The agency also wants to define criteria for advanced projects, which will demonstrate their maturity, and less advanced projects, which will demonstrate how they address infrastructure needs.

Assessment of investment applications and cost-sharing mechanisms

There are currently at least three different mechanisms enabling the sharing of costs and benefits for projects focused on electricity transmission and distribution. Cross-border cost allocation (CBCA) for projects of common interest, inter-operator compensation (ITC) and congestion income distribution (CID). None of them can ensure a fair distribution of the benefits arising from cross-border trade.

ACER’s recommendations in the document are limited to modifying the legal framework related to CBCA. The TEN-E Regulation, which ACER seeks to amend, focuses exclusively on this mechanism. Current practice shows that CBCA is often requested only to meet the conditions for CEF grants, which are established for the development of trans-European networks in selected areas. There is no preliminary overview of the distribution of benefits, and the process does not allow timely coordination between countries.

Based on this, ACER recommends avoiding a linkage between CBCA and CEF grants, and allowing a parallel or two-stage process. At the same time, it suggests considering the introduction of a preliminary assessment of potential beneficiaries during the selection of projects of common interest, so that fair cost and benefit sharing can function between countries.

Support for modernisation and resilience of the Czech electricity system

The European Commission already highlighted the need for preventive investment in EU electricity grids themselves in guidance published in June.

The Ministry of Industry and Trade and the Ministry of the Environment announced in mid-September the launch of the first call under the ELEGRID programme. It focuses on modernising and increasing the resilience of the electricity system, in particular by supporting measures that increase the capacity to connect renewable energy sources.

Applications will be accepted from 29 September 2025 to 29 January 2027 through the State Environmental Fund of the Czech Republic’s information system. Transmission system operators or distribution system operators in areas with more than 90,000 connected metering points may apply for support.

The total amount allocated from the Modernisation Fund for the programme is 10 billion Kč. Applicants may submit projects requesting grants of up to 25 % of the call’s allocation per project and 50 % of the allocation per applicant or linked enterprises.

Applicants may use support paid ex post for all costs directly related to project implementation. Financial support is provided by the State Environmental Fund in the form of unit grants corresponding to the extent of the increase in electricity system capacity (Kč/MW). However, the grant does not constitute reimbursement of specific expenditure, but rather a contribution towards the achieved (and technically documented) output.

The programme’s website provides information on the state of fund drawdown based on the latest update.