Changes from report parliamentary committee draft to plenary report

Added(32) Member States that do not currently have in place accelerated or urgent judicial procedures applicable to energy infrastructure projects should be encouraged to consider introducing such procedures, in particular by evaluating whether that would lead to the quicker implementation of such projects.

RemovedAnnex VII – paragraph 1 – point 8 a (new): (8a) It shall consider the role of flexibility solutions, including energy storage and demand response, in addressing network constraints and supporting the efficient integration of renewable electricity generation;

Added(33) Projects concerning hydrogen assets, electrolyser facilities and carbon dioxide assets contribute to energy and climate goals, including with regard to the need to accelerate the deployment of renewable energy and its integration in their energy mix. Therefore, all projects of common interest and projects of mutual interest concerning hydrogen, electrolyser facilities, and carbon dioxide assets should be considered to be of public interest from an energy policy perspective, and it should be possible for Member States to consider them as being of overriding public interest, except for cultural heritage and where there is clear evidence that those projects have significant adverse effects on the environment which cannot be mitigated or compensated for.

Added(34) Due to their role integrating renewable energy assets, flexibility solutions, energy storage and electrification in general, electricity infrastructure projects are considered essential to reach climate neutrality. Therefore, until the Union climate neutrality target is achieved, such projects, including the refurbishment, modernisation and repowering of existing grid infrastructure, should be presumed to be of overriding public interest and to serve public health and safety where balancing competing legal interests, except for cultural heritage on the basis of legal criteria to ensure harmonised implementation, and where there is clear evidence that those projects have significant adverse effects on the environment which cannot be mitigated or compensated for, as provided for in Directive (EU) 2019/944 of the European Parliament and of the Council.

Added(35) Due to their importance to reach climate neutrality, and their strategic importance as projects on the Union list, it should be possible for Member States to allow for projects of common interest and projects of mutual interest concerning electricity that have been expressly included in a National Development Plan which was subject to a strategic environmental assessment in accordance with Directive 2001/42/EC of the European Parliament and of the Council, and, if it is likely to have a significant impact on Natura 2000 sites, to the appropriate assessment pursuant to Article 6(3) of Directive 92/43/EEC, to be exempted from environmental impact assessments under Directive 2011/92/EU, from assessments of their implications on species protection pursuant to Article 12(1) of Directive 92/43/EEC and to Article 5 of Directive 2009/147/EC, and from assessments of their implications for Natura 2000 sites. Such exemptions should be possible until climate neutrality is achieved. When developing the National Development Plans, transmission system operators should take into account best practices to avoid and minimise negative impacts on nature and, where feasible, create positive impacts, in accordance with the mitigation hierarchy. The Commission should support this by facilitating access to reliable geospatial databases, assessment tools and sensitivity maps to help prioritise grid infrastructure deployment where environmental and biodiversity impacts are lowest, and by providing guidance on nature-positive practices.

Added(36) In order to mitigate any possible impact of such exemptions, following the screening Member States’ competent authorities should ensure that appropriate and proportionate mitigation measures are applied, considering the use of the best available technologies. Where it is not possible to apply such mitigation measures, competent authorities should ensure that project promoters adopt appropriate compensatory measures to address those effects, which, if other proportionate compensatory measures are not available, may include the payment of monetary compensation for species protection programmes. In addition, where a project is likely to have significant negative effects on the environment of another Member State, the national competent authorities should ensure that the Member States concerned have cooperated to identify measures to avoid the significant impacts, or, where needed, to mitigate or compensate them.

Added(37) In order to speed up the deployment of the trans-European energy network, the conditions for applying specific derogations as set out in Union environmental legislation should be clear. In particular, when assessing whether there are satisfactory alternative solutions to energy projects, the scope of such assessment should be limited to alternative solutions that ensure the achievement of the same objective within the same or similar timeframe and without resulting in significantly higher costs. When comparing the timeframe and the cost of satisfactory alternative solutions, the relevant authorities should be able to take into account the need to deploy projects of common interest and projects of mutual interest in an accelerated and cost-effective manner in accordance with the priorities set out in their integrated national energy and climate plans and updates thereof submitted to the Commission pursuant to Regulation (EU) 2018/1999.

Added(38) Similarly, when applying the relevant derogation provided for in Directive 92/43/EEC, it is appropriate that the relevant authorities may, in justified cases and where it can be reasonably demonstrated that the plan or project would not irreversibly affect, before the measures are put into place, the overall coherence of the Natura 2000 network, the environmental integrity of the site is preserved and a high level of protection of the Natura 2000 sites is ensured, allow that compensatory measures are carried out in parallel with the implementation of the plan or project.

Added(39) In order to reduce complexity, increase efficiency and transparency, and help enhance cooperation among Member States, Member States should ensure that there is one single competent authority responsible for facilitating and coordinating all permit-granting processes towards the issuing of a comprehensive decision, cooperating with other concerned authorities and national competent authorities of other Member States, acting as a sole point of contact for promotors mediating their contact with other authorities, and monitoring the development and delays of projects on the Union list.

Added(40) To increase the efficiency of procedures, national competent authorities should also be responsible for ensuring that, for hybrid transmission and generation projects, the timeline for permitting aligns to all assets of the project in a manner that expedites the permit-granting process for the generation and transmission assets.

Added(41) In order to simplify and expedite the permit-granting process for projects on the Union list located in two or more Member States, a unique point of contact amongst the national competent authorities should be jointly designated by the Member States concerned. Having a single authority facilitating the process, and issuing the final ▌decision, should lighten the administrative burden for project developers and reduce complexity, increase efficiency and speed up the permit-granting process, especially where Member States provide for joint procedures with aligned timelines and assessments. To ensure effective cross-border cooperation, the Commission should focus on identified interconnection priority projects strengthening the coordination and monitoring of their implementation and permitting. For that purpose, the Commission should support Member States in identifying joint procedures for an effective and efficient permit-granting process.

Added(42) Member States should be able to include in comprehensive decisions, where appropriate, decisions taken in the context of negotiations with individual landowners to grant access to, ownership of, or a right to occupy, property in the context of spatial planning, which determines the general land use of a defined region, including other developments such as highways, railways, buildings and nature protection areas and which is not undertaken for the specific purpose of the planned project and granting of operational permits. In the context of the permit-granting process, a project of common interest should be able to include related infrastructure to the extent that it is essential for the construction or functioning of the project.

Added(43) This Regulation, in particular the provisions on permit-granting, public participation and the implementation of projects of common interest, should apply without prejudice to Union and international law, including provisions to protect the environment and human health, and provisions adopted under the Common Fisheries Policy and Integrated Maritime Policy, in particular Directive 2014/89/EU of the European Parliament and of the Council.

Added(44) It is essential that stakeholders, including civil society, are provided with information and are consulted, in order to ensure the success of projects and to limit objections to them. Despite the existence of established standards ensuring the participation of the public in environmental decision-making procedures, which apply fully to projects of common interest, additional measures should be required to ensure the highest possible standards of transparency and public participation in all relevant issues in the permit-granting process for projects of common interest. Such participation should take place at an early stage, in order to allow stakeholders to contribute effectively to the identification of alternatives and to the most suitable location, trajectory or technology. Where already covered by national rules under the same or higher standards as in this Regulation, the pre-consultation ahead of the permit-granting process should be optional and duplication of legal requirements should be avoided.

Added(45) The correct and coordinated implementation of Directives 2001/42/EC and 2011/92/EU and, where applicable, of the United Nations Economic Commission for Europe Convention on access to information, public participation in decision-making and access to justice in environmental matters, signed in Aarhus on 25 June 1998 (the ‘Aarhus Convention’), and of the Convention on environmental impact assessment in a transboundary context, signed in Espoo on 25 February 1991 (the ‘Espoo Convention’), should ensure the harmonisation of the main principles for the assessment of environmental and climate effects, including in a cross-border context. The Commission has issued guidance to support Member States to streamline the environmental assessment procedures for energy infrastructure and to ensure the coherent application of environmental assessment procedures required under Union law for projects of common interest.

Added(46) It is important to streamline and improve the permit-granting process, while respecting, to the extent possible and with due regard to the principle of subsidiarity, national competences and procedures for the construction of new energy infrastructure. Given the urgency of developing energy infrastructures, the simplification of the permit-granting process should set a clear time limit for the decision of the relevant authorities regarding the construction of the project. That time limit should stimulate an efficient definition and handling of procedures. This Regulation should establish maximum time limits. However, Member States can strive to achieve shorter time limits where feasible, in particular, as regards projects such as smart grids, which may not require as complex a permit-granting process as the one for transmission infrastructure.

Added(47) The lack of resources of permit-granting authorities and the lack of digitalisation of permit-granting processes and data availability are bottlenecks slowing down permit-granting processes. Digitalisation and an appropriate use of artificial intelligence features are expected to speed up procedures and to increase efficiency of processes by allowing for faster handling of applications and increase transparency through improved access to information on procedural steps and requirements. However, digitalisation of permit-granting processes is lagging behind, with data often scattered across different competent authorities without unified digital processes or platforms, and without interoperability being ensured. That leads to lack of clarity on the status of the applications and hindering the identification of bottlenecks. Therefore, Member States should set up a digital platform at national level for all the steps of the permit-granting processes for renewable energy, storage and grid projects so that the digitalisation of procedures is uniform, interoperable and transparent maximising its benefits in terms of speeding up the permit-granting process. Such platforms should enable project promoters to file applications and check their status, attribute them to the competent authorities, and allow authorities to process them by having access to all relevant data and information, without the need for intermediate paper-based steps. In addition, such platform should allow for the extraction of statistics on the overall progress of permit-granting processes in Member States. Such digital platforms should rely on secure and interoperable means provided through European Digital Identity Wallets, in compliance with the requirements of Regulation (EU) No 910/2014, for natural persons and, in the future, with European Business Wallets, in compliance with [Regulation (EU) No XXX/20YY], for legal persons, for enabling electronic identification and authentication, signing or sealing of documents, submission of documents and sending or receiving notifications between competent authorities and economic operators

Added(48) The competent authorities should be responsible for ensuring compliance with the time limits established in this Regulation. Further, in line with the urgency to deploy energy infrastructures, and the strategic importance of projects of common interest and projects of mutual interest to achieve the Union’s energy and climate goals and to the extent that the concept of tacit approval exists under national law, Member States should ensure that the lack of a reply by the national competent authorities within the deadline set out in this Regulation, or a lack of a reply by an authority concerned within the deadline established by the national competent authority, leads to the specific opinion, authorisation or permit being tacitly approved or answered positively, with the exception of environmental decisions, and that such conclusion is made public.

Added(49) The permit-granting process should provide for two procedures, namely the optional pre-application procedure where the work towards a complete application file is delivered and accepted by the national competent authority, and the mandatory statutory permit-granting procedure between the acceptance of the file and the moment the authorities render a comprehensive decision. Within the pre-application phase national competent authorities should carry out a series of tasks. They should screen the project and notify the project promoter of what authorisations, studies, permits and assessments are required to complete the permit-granting process, including the environmental assessments and mitigation or compensation measures that should be deployed. They should define the scope and level of detail of the documentation identified in the screening conclusions, making sure that no subsequent documentation is to be requested from the project promoter save for where a material change has occurred to the project or its surrounding environment that renders the conditions and assumptions used to determine the scope non-applicable. They should draw up a detailed schedule for the permit-granting process. After receiving the draft application file, including all the preparatory documents, they should decide whether the file is deemed complete or requires the missing information in accordance with what was identified at the pre-application procedure.

Added(50) Where it is considered efficient, the national competent authorities may design the permitting requirements for the permit-granting process and public consultations of a certain project to take place in phases, provided the permit-granting process is simplified and accelerated.

Added(51) This Regulation should apply only to the granting of permits for projects of common interest and projects of mutual interest, public participation therein and the regulatory treatment of the projects. Member States should nevertheless be able to adopt national provisions to apply the same or similar rules to other projects that do not have the status of projects of common interest or projects of mutual interest within the scope of this Regulation.

Added(51a) The Draghi report identified the fact that the current system still reserves a number of tasks and responsibilities of a regulatory nature to private bodies with commercial interests as one of the causes of the low degree of integration in the Union energy market. Today, many system operators are still owners of the infrastructure and, at the same time, are those in charge of operating it and planning its development. In addition, regulatory practices mostly award capital expenditure, with physical assets constituting a larger share of the asset base of the system operators. It is crucial to untangle those functions, especially where they fall within the remit of commercial entities, to address the structural advantage in favour of building more wires, while demand-side flexibility, storage and community energy projects remain underutilised. All tasks of a regulatory nature should be performed by regulatory agencies acting in the public interest. For that reason, as part of the review of this Regulation, the Commission should assess the need for, and feasibility of, establishing an Independent European System Planner as a permanent and independent entity at Union level.

Added(52) The Union-wide ten-year network development plan process provides a solid basis for the identification of projects of common interest and projects of mutual interest. While the European Network of Transmission System Operators for Electricity (ENTSO for Electricity), the European Network of Transmission System Operators for Gas (ENTSO for Gas), the European Network of Network Operators for Hydrogen (ENNOH) and TSOs continue to play an important role in the process, more streamlining and steering is required, in particular as regards defining the scenarios for the future, identifying long-term infrastructure gaps and energy infrastructure bottlenecks and addressing those gaps with most adequate solutions, to increase the political weight, pertinence and robustness of the process. Therefore, the Agency and the Commission should have an increased role in the process for drawing up the Union-wide ten-year network development plans pursuant to Regulations (EU) 2019/943 and (EU) 2024/1789 and, in particular, the Commission should lead and coordinate the development of a Union strategic scenario providing a common reference framework for infrastructure planning and assessment.

Added(53) Considering that the selected scenario, the sensitivities and its underlying assumptions play a major role in the Union-wide network development planning process, the Commission should play a central role in defining it. That should help streamline the inputs and ensure better compliance with the Union’s policy targets. It is therefore appropriate for the Union-wide ten-year network development plans to be based on a Union strategic scenario providing a common reference framework, comprising an initial scenario, an alternative scenario and mandatory sensitivity analyses, with a perspective until at least 2050. The Union strategic scenario should take a cross-sectoral approach and take into account relevant national and regional specificities and planning instruments, while ensuring consistency and comparability of assumptions at Union level. The increased importance of the Union strategic scenario requires close involvement of the ENTSO for Electricity, the ENNOH, and the ENTSO for Gas, the Member States and the Agency to ensure that relevant data and information is provided, and that the scenario is aligned with national developments. The Stakeholder Reference Group should continue providing coordinated stakeholder input and advice on scenario development.

Added(54) The process of identifying infrastructure needs should play a stronger role in guiding planned infrastructure investments. Compared to current practice, the process should be broader and consider more thoroughly cross-sectoral links and non-wire solutions, including grid enhancing technologies, including behind the meter cross-sectorial demand flexibility, alternative national solutions, in order to clearly identify what solutions best serve the energy system in achieving the energy affordability, resilience and climate goals. It should be based on the Union strategic scenario and its sensitivity analyses and should take into account available and emerging grid-enhancing and digital solutions, as well as relevant climate and system risks. The Agency should be more involved in setting the framework for the process and its verification to increase acceptance of the subsequent solutions necessary to address the gaps. A binding methodology developed by the Agency should ensure a robust and consistent identification of infrastructure needs, while the Agency should assess the resulting reports for compliance with the requirements of this Regulation. The Agency should also have the power to request justified amendments, and to approve or amend the draft infrastructure needs identification report.

Added(55) Making the process of identifying infrastructure needs more comprehensive and granular should enable better matchmaking of planned projects with the needs for transmission capacity expansion. It should also enable a follow-up process leading to identifying new solutions which could address unmatched needs. Where identified needs are not fully addressed, as a last resort the Commission should, without undue delay, initiate a targeted process to identify possible solutions, taking into account the Union strategic scenario and its sensitivity analyses. System operators should be the primary entity to suggest possible projects to address the gaps, but alternative solutions coming from other stakeholders should also be considered. Therefore, a needs matching process should be an outcome of regional cooperation and involve relevant stakeholders in the discussions. The central role of the Commission in the process should enhance regional cooperation and involvement of Member States, national regulatory authorities, project promoters and other relevant stakeholders in the effort to come up with the most adequate projects, be it non-wire or infrastructure solutions to match any possible unaddressed needs. The process should take into account the Union strategic scenario and its sensitivity analyses. As a last resort, the Commission should launch a targeted call for proposals to overcome insufficient progress in addressing persisting gaps. It should be ensured that eligible projects are included as soon as possible in the subsequent national development plans, Union-wide ten-year network development plan and the Union list.

Added(55a) In identifying infrastructure needs and optimising the use of existing electricity networks, system operators, the Commission, Member States, the Agency and the competent national authorities should take into account the system value delivered by grid-supportive assets, including electricity storage and other non-fossil flexibility resources, at all voltage levels, including transmission networks. Such assets can contribute to congestion relief, efficient use of network capacity, system security and cross-border integration, in line with the objectives of this Regulation and without prejudice to the application of Directive (EU) 2019/944.

Added(56) An energy system-wide cost-benefit analysis is necessary to ensure that infrastructure planning reflects the evolving needs of an integrated and decarbonised system, by consistently assessing all relevant costs and benefits in order to identify the most efficient solutions for achieving Union energy and climate objectives. The methodologies used for that analysis should be based on common assumptions and on the Union strategic scenario and its sensitivity analyses and should ensure a cross-sectoral approach and contribute to the resilience of the energy system. Non-wire solutions, such as dynamic line and transformer rating, advanced power flow control systems or digital twin platforms should play a greater role in addressing network needs both in operational and expansion terms and should therefore also be covered by the energy system wide cost-benefit analysis.

Added(57) The Union-wide ten-year network development plan should provide a comprehensive overview of planned infrastructure projects having cross-border impacts in the Union. Non-wire and flexibility solutions should form an intrinsic part of the plan so that it provides a full picture of future investments necessary for optimal operation of the electricity and hydrogen networks. A specific consideration should also be given to projects improving security and resilience of the network.

Added(58) In carrying out their tasks preceding the adoption of the Union-wide ten-year network development plans, the ENTSO for Electricity and the ENNOH, the Agency and the Commission should conduct an extensive consultation process involving all relevant stakeholders. Those stakeholders should include the European entity for the cooperation of electricity distribution system operators in the European Union , associations involved in electricity, gas and hydrogen markets, heating and cooling, carbon capture and storage and carbon capture and utilisation stakeholders, independent aggregators, demand-response operators, organisations involved in energy efficiency solutions, industrial sectors including transport, digitalisation, and data, as well as energy consumer associations, the European Scientific Advisory Board on Climate Change and civil society representatives, as relevant. The Stakeholder Reference Group has proven to be an effective forum of stakeholder cooperation and its further contribution to the Union wide ten-year network development plan should be supported. The consultation should be open and transparent and should be organised in a timely manner to allow for stakeholders’ feedback in the preparation of key phases of the Union-wide ten-year network development plans, such as infrastructure gaps identification and the cost-benefit analysis methodology for project assessment. The Commission should duly consider the input received and explain how it has been taken into account in the adopted Union strategic scenario.

Added(59) Energy infrastructure planning should properly reflect sector coupling and cross-linkages between energy carriers. The development of the Union strategic scenario, the process of identifying infrastructure needs and the methodologies for cost-benefit analysis should be based on an integrated, long-term and optimised ‘one energy system’ approach and modelling which uses common assumptions and consistent methodologies. Greater coordination of infrastructure planning across sectors should help prioritise and deploy new infrastructure solutions in a more optimal manner. The Union strategic scenario should in particular ensure consistency across the electricity, hydrogen and gas sectors and, where relevant, CO₂ transport and storage, while taking into account relevant national and regional specificities.

Added(60) The importance of ensuring that only infrastructure projects for which no reasonable alternative solutions exist may receive the status of project of common interest or project of mutual interest also entails that the ‘energy efficiency first’ principle should be taken into account in the energy infrastructure planning and in the work of the regional groups in establishing the regional lists of proposed projects. In accordance with the energy efficiency first principle, all relevant alternatives to new infrastructure for ensuring future infrastructure needs, should be considered. Special consideration should be given to non-wire, innovative transmission, distribution and grid optimisation technologies, , use of demand response or non-fossil flexibility, which could improve overall efficiency of the networks. To this aim, these solutions should be considered with priority by system operators when assessing projects for system expansion. A cost-efficient utilisation of networks should also be incentivised, notably through the use of locational and time-of-use price signals in network charges and support schemes. The energy system-wide cost-benefit analysis should also take into account cross-sectoral interactions and the contribution of projects to the Union’s energy and climate objectives, as well as to the resilience of the energy system.

Added(60a) A comprehensive assessment of the Union energy infrastructure framework is needed to provide an integrated strategic overview of the results of the infrastructure planning processes and to identify the main future infrastructure needs, priorities and gaps at Union level. Such an assessment should complement the Union strategic scenario by providing a long-term perspective on the evolution of the Union energy system, including its interdependencies across sectors, and should support coordinated and timely investment decisions while not replacing the specific planning and project selection processes established under this Regulation.

Added(61) To achieve the Union’s 2050 climate neutrality objective, the Union needs to significantly scale up renewable electricity generation. Investment in offshore renewable energy should be increased with the aim of reaching at least 350 GW of offshore renewable generation installed in accordance with the cumulative non-binding regional Member States offshore renewable goals updated in December 2024 and supported in the Commission Communication of 24 October 2023 entitled ‘Delivering on the EU offshore renewable energy ambitions’. The first Offshore network development plans (ONDPs) published by the ENTSO for Electricity in January 2024 made an important step forward by anchoring Member States offshore regional ambitions in offshore network planning. That should support the identification of cross-border offshore renewable projects, including hybrids and cross-border radials, to ensure an optimized and cost-efficient development of offshore networks at sea-basin level. That planning should also take account of the offshore and related onshore grid infrastructure required to accommodate offshore renewable generation, including in island Member States, peripheral and outermost regions with significant renewable generation potential and limited existing interconnection. Increased cooperation between transmission system operators should be encouraged in order to identify efficient offshore and onshore grid solutions. The strategic long-term logic included in the ONDPs should be extended to onshore electricity grids, as well as hydrogen networks. The ONDPs should be developed jointly by the ENTSO for Electricity and the ENNOH, taking into account the Union strategic scenario, and should support the coherent development of offshore electricity and hydrogen infrastructure.

Added(62) The assessment of the benefits and costs of the priority offshore grid corridors for renewable energy should support Member States to carry out a preliminary cost-sharing analysis at priority offshore grid corridor level, in order to underpin the subsequent joint political commitments for cross-border offshore grid projects. The Commission guidance on collaborative investment frameworks for offshore projects of 27 June 2024 should inform the assessment of the benefits and costs of the priority offshore grid corridors for renewable energy and may be updated by the Commission, with the involvement of the Member States, relevant TSOs, HTNOs, the ENNOH, the Agency and the national regulatory authorities, when considered relevant. The guidance should, where available, also include a uniform cross-border cost-allocation methodology for offshore hybrid projects.

Added(63) The costs of the development, construction, operation and maintenance of projects of common interest should in general be borne by the users of the infrastructure. The cost allocation should ensure that end-users are not disproportionately burdened, especially where that could lead to energy poverty. Projects of common interest should be eligible for cross-border cost allocation where an assessment of market demand, or of the expected effects on tariffs, indicates that costs cannot be expected to be recovered by the tariffs paid by the infrastructure users.

Added(64) In an increasingly interconnected internal energy market, clear and transparent rules for cross-border cost-allocation are necessary in order to accelerate investment in cross-border infrastructure and in projects with a cross-border impact. As cross-border energy infrastructure becomes more integrated, more projects deliver benefits beyond the territories where they are built. That makes fair and transparent cost-sharing essential to avoid disproportionate burdens on local consumers. The discussion on the appropriate allocation of costs should be based on the analysis of the costs and benefits of an infrastructure project carried out on the basis of a harmonised methodology for energy-system-wide analysis, using the Union strategic scenario and any sensitivities established for the purpose of the Union-wide ten-year network development plans prepared pursuant to Regulations (EU) 2019/943 and (EU) 2024/1789, allowing for a robust analysis of the contribution of the project of common interest or mutual interest to the Union energy policies of decarbonisation, market integration, competition, sustainability and security of supply. Member States and national regulatory authorities in which at least 10 % of the estimated benefits of a project occur and which are involved directly or indirectly in interconnected projects should participate in discussions on cost allocation to ensure that the project can be implemented and its benefits delivered. Furthermore, cross-border cost allocation agreements should consider ex-post arrangements to ensure fair and proportionate participation of non-host countries, provided that such adjustments are clearly defined and structured in a way that safeguards investment certainty. In the case of offshore hybrid projects integrating a hybrid interconnector and an offshore renewable joint project, the cross-border cost allocation should be based on a uniform methodology taking into account both infrastructure and generation assets.

Added(64a) The increasing integration of the internal electricity market and deployment of renewable energy are leading to growing cross-border electricity flows and changing the distribution of network-related costs and benefits. At the same time, Member States may lack sufficient incentives and financial visibility to develop infrastructure projects that deliver positive benefits at Union or regional level where such benefits are not fully reflected at national level. Existing mechanisms, particularly the Inter-Transmission System Operator Compensation mechanism and cross-border cost allocation, help to address those challenges but may not always ensure a cost-reflective and cost-causation-based allocation or sufficient incentives for infrastructure beyond national needs. Against this background, the Commission should without undue delay assess the amounts for compensation. In particular, it should be examined to what extent the current framework ensures cost-reflectivity, cost causation and enables a balanced allocation of costs and benefits among Member States. On that basis, the Commission should submit the necessary legislative proposals.

Added(65) It is essential to ensure a stable financing framework for the development of projects of common interest while minimising the need for financial support, and at the same time to encourage interested investors, with appropriate incentives and financial mechanisms. In deciding on cross-border cost-allocation, national regulatory authorities should allocate efficiently incurred investment costs, as relevant in view of their national approaches and methodologies for similar infrastructure, across borders in their entirety and include them in the national tariffs. Afterwards, where relevant, national regulatory authorities should determine whether their impact on national tariffs could represent a disproportionate burden for consumers in their respective Member States. The national regulatory authorities should avoid the risks of double support for projects by taking into account actual or estimated charges and revenues. Those charges and revenues should be taken into account only in so far as they relate to the projects and are designed to cover the costs concerned.

Added(66) To facilitate discussions on cost-sharing and permitting between the relevant Member States and third countries a possibility of bundling projects of common interest and projects of mutual interest should be provided. By allowing groups of Member States to treat a project bundle as mutually beneficial, win-win solutions can be fostered, risks and transaction costs in negotiations reduced, and the likelihood of implementation can be increased. Where appropriate, cost-benefit analyses and cost-sharing proposals may be assessed at bundle level to facilitate cross-border cost-allocation decisions. Additional support at Union level, for example through the Connecting Europe Facility, or at regional level using congestion income, could further facilitate such agreements and promote the timely delivery of priority infrastructure.

Added(67) Regulation (EU) 2019/943 lays down, in Article 19(2), three priority objectives for the use of revenues resulting from the allocation of cross-zonal capacity, namely: (a) guaranteeing the actual availability of the allocated capacity, including firmness compensation; (b) maintaining or increasing cross-zonal capacities through the optimisation of existing interconnectors or by covering costs resulting from network investments relevant to reducing interconnector congestion; and (c) compensating offshore renewable electricity generation plant operators in the circumstances set out therein. TSOs should ensure that all three priority objectives are fulfilled, including the objective in point (b). In order to facilitate the financing of projects of common interest and projects of mutual interest that reduce interconnector congestion and to bring predictability and transparency to discussions on cross-border cost allocation decisions pursuant to Article 16 of this Regulation, it is appropriate to require TSOs to set aside 30 % of congestion rents not allocated to the priority objectives under Article 19(2), points (a) and (c), of Regulation (EU) 2019/943 for such investments. Congestion rents arising from internal bidding zone borders within a Member State should not be subject to that requirement. That requirement is without prejudice to the responsibility of TSOs to decide on funding priorities, under the supervision of regulatory authorities and in accordance with the methodology approved pursuant to Article 19(4) of Regulation (EU) 2019/943. That requirement should not apply where it can be demonstrated that there is no need for additional cross-border capacity to be built at the borders of the Member State concerned.

Added(67a) Congestion rents under this Regulation should be used to support investments that reduce interconnector congestion and strengthen the electricity system. Where the conditions laid down in Article 19 of Regulation EU 2019/943 have been fulfilled, they may also contribute to improving resource adequacy through support to low-carbon and renewable electricity generation and to targeted measures supporting final electricity customers, thereby enhancing security of supply, affordability and the resilience of the Union’s electricity system.

Added(68) Where there is no TSO in a Member State, the references to TSOs throughout this Regulation should apply mutatis mutandis to distribution system operators (DSO).

Added(69) The internal energy market legislation requires that tariffs for access to networks provide appropriate incentives for investment. However, several types of projects of common interest are likely to have externalities that might not be fully captured in, and recovered through, the regular tariff system. In applying the internal energy market legislation, national regulatory authorities should ensure a stable and predictable regulatory and financial framework with incentives for projects of common interest, including long-term incentives, that are commensurate with the level of specific risk of the project. That framework should apply in particular to cross-border projects, innovative transmission technologies for electricity allowing for the large scale integration of renewable energy, of distributed energy resources or of demand response in interconnected networks, and energy technology and digitalisation projects, which are either likely to incur higher risks than similar projects located within one Member State or which promise higher benefits for the Union. Moreover, projects with high operational expenditure should also have access to appropriate incentives for investment. In particular, offshore grids for renewable energy, which serve the dual functionality of electricity interconnectors and connecting renewable offshore generation projects, are likely to incur higher risks than comparable onshore infrastructure projects, due to their intrinsic connection to generation assets which brings regulatory risks, financing risks such as the need for anticipatory investments, market risks and risks pertaining to the use of new innovative technologies.

Added(70) Regulation (EU) 2022/869 has demonstrated the added value of leveraging private funding through significant Union financial assistance to allow the implementation of projects of Union significance. In the light of the economic and financial situation and budgetary constraints, targeted support should continue under the multiannual financial framework, also with a view to de-risking projects and crowding in private investment, in order to maximise the impact of public funding and its benefits to Union citizens and to attract new investors into the energy infrastructure priority corridors and areas set out in Annex I to this Regulation, while keeping the budgetary contribution of the Union to a minimum. To achieve this, Union financial assistance should act as a catalyst for mobilising private investment, while keeping the direct budgetary contribution of the Union to a minimum. Financing cross-border hydrogen infrastructure can be particularly challenging due to the anticipatory nature of its development and its dependence on the progressive development of the hydrogen market. Appropriate Union-level de-risking and financing mechanisms could therefore help facilitate investment and provide greater certainty for project promoters.

Added(71) Projects of common interest should be eligible for Union financial assistance for studies and, under certain conditions, for works pursuant to Regulation (EU) 2021/1153 of the European Parliament and of the Council in the form of grants or innovative financial instruments to ensure that tailor-made support can be provided to those projects of common interest which are not viable under the existing regulatory framework and market conditions. For cross-border hydrogen infrastructure, appropriate Union-level de-risking and financing mechanisms may facilitate investment where the existing regulatory framework and market conditions do not provide sufficient certainty. It is important to avoid any distortion of competition, in particular between projects contributing to the achievement of the same Union priority corridor. Such financial assistance should ensure the necessary synergies with other Union funds available for financing smart energy distribution networks, and with the Union renewable energy financing mechanism established by Commission Implementing Regulation (EU) 2020/1294.

Added(72) A three-step logic should apply to investments in projects of common interest. First, the market should have the priority to invest. Second, where investments are not made by the market, regulatory solutions should be explored, the relevant regulatory framework should be adjusted where necessary, and the correct application of the relevant regulatory framework should be ensured. Third, where the first two steps are not sufficient to deliver the necessary investments in projects of common interest, it should be possible to grant Union financial assistance where the project of common interest fulfils the applicable eligibility criteria.

Added(73) Projects of common interest and projects of mutual interest should not be eligible for Union financial assistance where the project promoters, operators or investors are in one of the situations of exclusion referred to in Article 138 of Regulation (EU, Euratom) 2024/2509 of the European Parliament and of the Council, such as in cases of a conviction for fraud, corruption or conduct related to a criminal organisation. It should be possible to remove a project of common interest from the Union list if its inclusion in that list was based on incorrect information which was a determining factor for that inclusion, or if the project does not comply with Union law. For a project of common interest located in the Member States benefiting from a derogation under this Regulation, those Member States should ensure, when supporting any applications for financing pursuant to Regulation (EU) 2022/869 for such projects, that the projects do not benefit directly or indirectly persons or entities that are in one of the situation of exclusion as referred to in Article 138 of Regulation (EU, Euratom) 2024/2509.

Added(74) Grants for works related to projects of mutual interest should be available under the same conditions as for projects of common interest where they contribute to the Union’s overall energy and climate policy objectives and where the decarbonisation objectives of the third country are consistent with the Paris Agreement.

Added(74a) Distribution grids play a major role for the energy transition. 40 % of the Union's distribution grid is more than 40 years old and needs to be upgraded. Investments of EUR 730 billion for distribution grids by 2040 are needed to enable the integration of new, clean, low-marginal-cost generation projects reducing wholesale electricity prices. The National and Regional Partnership Plans can reinforce the energy infrastructure investments provided by CEF, for instance through investment in energy assets that do not have a cross-border nature but are equally important for the energy transition.

Added(75) The Union should facilitate energy projects in disadvantaged, less connected, peripheral, outermost or isolated regions to enable access to the trans-European energy networks in order to accelerate the decarbonisation process and reduce dependency on fossil fuels. Particular attention should be paid to outermost regions within the meaning of Article 349 TFEU and islands, which may benefit less from cross-border infrastructure instruments and rely more heavily on cohesion policy funding for essential energy investments. Synergies between the CEF and cohesion policy instruments, including National and Regional Partnership Plans, should therefore be strengthened.

Added(76) In accordance with the European Council conclusions of 4 February 2011 that no Member State should remain isolated from the European gas and electricity networks after 2015 or see its energy security jeopardised by lack of the appropriate connections, this Regulation aims to ensure access to the trans-European energy networks by ending the energy isolation of Cyprus and Malta, that are still not interconnected to the trans-European gas network. That objective should be attained by allowing projects under development or planning that have been granted the status of project of common interest under Regulation (EU) 2022/869 to maintain their status until Cyprus and Malta are interconnected to the trans-European gas network or until 31 December 2029, whichever is earliest. Apart from contributing to the development of the renewable energy market, the flexibility and resilience of the energy system, and the security of supply, those projects would ensure access to future energy markets, including hydrogen, and contribute to achieving the Union’s overall energy and climate policy objectives.

Added(77) To ensure consistency of proposed changes under this Regulation with the Union framework on electricity, gases and hydrogen markets, corresponding amendments are proposed to Articles 3 and 11 of Regulation (EU) 2019/942 of the European Parliament and of the Council, Article 48 of Regulation (EU) 2019/943 and Articles 60 and 61 of Regulation (EU) 2024/1789. Those amendments relate to the use of the Union strategic scenario in the Union-wide ten-year network development plans, the identification of system needs, the consideration of alternatives to network expansion and the assessment of system resilience, as well as cooperation between the ENNOH, the ENTSO for Electricity and the ENTSO for Gas in integrated network planning. Those Regulations should therefore be amended accordingly.

Added(78) In order to ensure the timely development of essential energy infrastructure projects for the Union, the third Union list of projects of common interest and projects of mutual interest should remain in force until the first Union list of projects of common interest and projects of mutual interest established pursuant to this Regulation enters into force. Moreover, to enable the development, monitoring and financing of the projects of common interest on the third Union list pursuant to the Regulation (EU) 2022/869, certain provisions of Regulation (EU) 2022/869 should remain in force and produce effects until the entry into force of the first Union list of projects of common interest and projects of mutual interest established pursuant to this Regulation.

Added(78a) Interconnector transmission system operators whose sole activity is the ownership, operation and maintenance of electricity interconnectors have a distinct position in the Union electricity internal market. The regulatory treatment of such operators should take their specificities into account and should not impede new interconnector investments. The Commission should assess their situation and, where appropriate, propose targeted amendments to Regulation (EU) 2019/943 and Directive (EU) 2019/944.

Added(79) In order to ensure that the Union list is limited to projects which contribute the most to the implementation of the strategic energy infrastructure priority corridors and areas set out in Annex I to this Regulation, the power to adopt acts in accordance with Article 290 of the Treaty should be delegated to the Commission in order to amend the annexes to this Regulation so as to establish and review the Union list, while respecting the right of the Member States to approve projects on the Union list related to their territories.

Added(80) The power to adopt acts in accordance with Article 290 of the Treaty should be delegated to the Commission to develop the Union strategic scenario, which is the basis for the Union-level network planning.

Added(81) The power to adopt acts in accordance with Article 290 of the Treaty should be delegated to the Commission to specify the conditions under which TSOs may use congestion income and the conditions under which the objective of Article 19(2), point (b), of Regulation (EU) 2019/943 is considered adequately fulfilled.

Added(82) It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making. In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States' experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts.

Added(83) The discussions in the Groups are instrumental for the Commission to adopt the delegated acts establishing the Union list. Therefore, it is appropriate that, to the extent possible, the European Parliament and the Council are informed about the results, and may send experts to the meetings of Groups in accordance with the Interinstitutional Agreement of 13 April 2016 on Better Law Making. Taking into account the need to ensure the achievement of the objectives of this Regulation and, in view of the number of projects on Union lists so far, the total number of projects on the Union list should remain manageable and therefore should not significantly exceed 220.