Background

The primary driver behind the revision of the TEN-E Regulation is to align the regulation with the new European Green Deal. The European Green Deal aims to transform the EU into a fair and prosperous society with a modern, resource-efficient and competitive economy. 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 green targets for 2030 and carbon-neutrality target for 2050.

The current type and scale of the cross-border infrastructure developments that the current TEN-E Regulation has brought about does not cover all of the infrastructure categories necessary for the energy transition, nor does it sufficiently reflect current, and future, technological developments. The TEN-E Regulation in its current form is not fit for purpose for achieving carbon-neutrality. The current framework is too inflexible to adapt to changing EU policies, such as the European Green Deal, and there is a need to ensure that the new decarbonisation and carbon-neutrality targets will be met.

Projects of common interest (PCIs) are a key feature of the TEN-E Regulation and continue to be in the revised version. PCIs are key cross-border infrastructure projects that connect energy systems across the EU. PCIs must adhere to a set of criteria that includes: having a significant impact on energy markets; boosting competition on energy markets; ensuring energy security in the EU and contributing to the EU’s climate goals. The selection criteria for PCIs have been updated in the revised TEN-E Regulation (see below).

To enable the TEN-E Regulation to be suitable for the energy transition, the revised regulation will aim at:

  • enabling the identification of the cross-border projects and investments across the EU and with its neighbouring countries that are necessary for the energy transition and achievement of the climate targets;
  • improving infrastructure planning for energy system integration and offshore grids;
  • shortening permitting procedures for PCIs to avoid delays in projects that facilitate the energy transition; and
  • ensuring the appropriate use of cost sharing tools and regulatory incentives.

The revised TEN-E Regulation aims to address the problems surrounding delays to the implementation of PCIs and access to financing for cross-border infrastructure projects. The new regulation is also aimed to ‘future proof’ the regulation and allow scope to capture future developments. The future framework will retain the existing system of regional groups in the selection process to further specify and adjust the new elements of technologies and future developments against the priorities of new policies and technological context, while still being able to review and consider the regional context.

General provisions

Chapter I of the revised regulation outlines the general provisions, notably the subject matter and scope of the new infrastructure categories that have been redefined to facilitate the general objective of developing energy infrastructures across the EU, while enabling the delivery of the EU’s energy and climate objectives as outlined within the European Green Deal. There is a particular focus on the targets set for 2030 and 2050, including the climate neutrality objective, as well as ensuring the market remains integrated and competitive, and security of supply is secured at the least cost for consumers and businesses. The current Articles 2(7), 4(2)(c), 4(4) and Annexes I, II, IV, which define the criteria for smart electricity grids, have been updated to reflect technological changes in recent years, and to include regarding potential innovations and digital elements that could be considered.

Gas

Provisions in relation to the inclusion of natural gas elements in the scope of the TEN-E Regulation now reflect the improvements in the security of supply of such gas, partly due to the implementation of the TEN-E Regulation. The revised TEN-E Regulation is looking to reflect the changing gas landscape with 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 that deal with such gases. The aim of this new category is to increase the investment in more sustainable, greener gases. Hydrogen networks with cross-border relevance, either dedicated new, or repurposed old hydrogen networks, will be included in the revised TEN-E Regulation. Power-to-gas facilities above a certain threshold with a cross-border relevance will also be caught by the regulation.

PCIs

The selection criteria for PCIs has been updated in the revised TEN-E Regulation, with the addition of PCIs that are able to demonstrate sufficient socio-economic benefits for at least two member states and at least one third country[1]. To reflect the objectives set in the European Green Deal, cross-border oil pipelines will no longer be included in the regulation as eligible to be a PCI.

Chapter II outlines the provisions regarding the process of preparing the Union lists of PCIs within the regional groups, the criteria for selection and the monitoring of project implementation. 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. This is to ensure coherence with the changing infrastructure needs of the EU and the requirements set to meet the decarbonisation targets.



[1] Article 4(2)

Infrastructure planning

The new provisions under Chapter II and IV aim to improve the infrastructure planning for the energy system integration. The revised TEN-E Regulation aims to strengthen the governance of the ten-year network development plan, which is one of the bases of the identification of PCIs for the categories of gas and electricity. ACER and the European Commission will have a greater role in the selection process of PCIs, mainly due to the need for independent validation.

Permitting procedures

New provisions in Chapter III are aimed to reduce the delays experienced in setting up the PCI, through shortening permitting procedures. The revised TEN-E Regulation institutes the need for competent authorities to coordinate and find synergies with neighbouring countries when developing procedures to avoid additional requirements or legislative amendments during the process of granting permits. The aim is to accelerate or shorten the overall duration of the permitting stage. An ‘offshore one-stop shop’ has been introduced to simplify and expedite the process for offshore grids for renewable energy. The new provisions also increase the transparency obligation on the promoters of the project, with an obligation on the project promoter to take into account any opinions expressed in the public consultations and demonstrate how this has and will be achieved for the PCI.

Financing

Existing provisions under Chapter VI have been revised to increase the transparency and clarity for the allocation of costs and to accelerate the investment into such cross-border infrastructure. New provisions under Chapter VII have been updated to change the eligibility of projects for financial assistance from the EU for the new infrastructure categories. 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.

Looking ahead

It is not clear yet when exactly the proposed new rules will enter into force. The revised regulation proposal is to be reviewed and negotiated with the European Parliament and Council. Therefore, the precise timing will depend on the outcome and timings of these discussions. The provisional date, as set out in the proposal, from which the revised TEN-E Regulation will apply is 1 January 2022. The revised regulation will be directly applicable in all Member States of the EU.

The fifth PCI list is due for publication at the end of 2021. That process will follow the existing TEN-E Regulation but with added sustainability criteria and assessment. The European Commission intends for the revised TEN-E Regulation to be in force in time for the preparation of the sixth PCI list.

Silke Goldberg

Silke Goldberg
Partner, London
+44 20 7466 2612

Lorenzo Parola

Lorenzo Parola
Partner, Milan
+39 02 3602 1405