The EU energy infrastructure package

Overview

The so-called “EU energy infrastructure package” has been in force since 2013. It is the Regulation (EU) No 347/2013 on guidelines for trans-European energy infrastructure, which aims to support  countries in their implementation of energy infrastructure projects. These projects are crucial for Europe to reach its energy and climate goals, to complete the Internal Energy Market and enhance the security of energy supply in the EU. 

Revision of the Regulation

In light of the climate change crisis and the European “Green Deal”, the European Commission is  preparing a revision of the Infrastructure Regulation. In July 2020, E-Control produced an extensive position paper in connection to this, which presents possible improvement measures concerning the following topics:

•    Anchoring the Green Deal in the Regulation
•    Coherence of the Regulation
•    Governance of the Regulation
•    PCI selection process
•    Revised energy infrastructure categories and groups
•    Timely implementation and permit granting processes
•    Criteria for project financing

Projects of common interest (PCIs)

The Infrastructure Regulation contains a process for identifying projects of common interest (PCIs) that are a central piece for the realisation of the trans-European energy infrastructure priority corridors and areas. Under this framework, energy infrastructure includes in particular:
•    High-voltage overhead lines, underground and submarine transmission cables, and electricity storage facilities;
•    Electricity smart grids
•    Gas transmission pipelines, along with reception, storage and regasification or decompression facilities for liquefied natural gas (LNG) and compressed natural gas (CNG); and
•    Infrastructure such as pipelines used to transport crude oil and carbon dioxide transport projects.

Projects that are granted PCI status potentially qualify for a variety of preferential treatment measures under the Infrastructure Regulation. These are briefly explained below.

Only projects that fulfil the following criteria can be included in the PCI list:
•    A PCI must be necessary to implement one of the energy infrastructure corridors or areas set out in Annex I to the Regulation;
•    A PCI must concern at least two Member States (or one Member State and one EEA country); and
•    A PCI’s potential overall benefits must outweigh its costs.
•    Electricity and gas projects must, in addition, considerably contribute to market integration, competition (for gas projects only), sustainability or security of supply.

The proposed electricity and gas projects must be included in the last national ten-year network development plan (TYNDP) prepared by ENTSO-E or ENTSOG. 

The PCI list is updated every other year. 

The Infrastructure Regulation provides that in a first step towards the Union list, national regulators, member states, system operators, the Agency for the Cooperation of Energy Regulators (ACER) and the European Commission come together in regional groups to discuss PCI candidates on the basis of the ten-year network development plans. Following a public consultation and an ACER opinion, European Commission and member states together decide which projects make it onto the final list. Then, the European Commission adopts the Union list as a delegated act. 

For further information about PCIs, please consult the European Commission’s website: http://ec.europa.eu/energy/infrastructure/pci/pci_en.htm

The Commission’s website also contains an interactive map with an overview of PCIs and links for details on the individual projects: http://ec.europa.eu/energy/infrastructure/transparency_platform/map-viewer/ 

Cost-benefit analysis

Article 11 of the Infrastructure Regulation obliges ENTSO-E and ENTSOG (European Network of Transmission System Operators for Electricity and Gas respectively) to publish harmonised methodologies for energy-system-wide cost-benefit analyses. These provide the basis for PCI selection, cross-border cost allocation and the selection of projects eligible for EU funding. The methodologies shall be approved once ACER, the European Commission, and possibly also Member States have provided opinions on them. 

The CBA methodology for electricity projects can be found on the ENTSO-E website: https://tyndp.entsoe.eu/cba/

The CBA methodology for gas projects can be found on the ENTSOG website: https://www.entsog.eu/methodologies-and-modelling

Cross-border cost allocation

According to the Infrastructure Regulation, the costs for the development, construction, operation and maintenance of projects of common interest should in general be fully borne by the member states that benefit from the infrastructure. If a PCI’s investment costs exceed its benefits in the investment country, the project might be eligible for cross-border cost allocation (CBCA). To this end, the project promoters must jointly file a request for cross-border cost allocation with the national regulatory authorities concerned, the project must be sufficiently mature and the transmission system operators of the member states that benefit from the project must have been consulted (cf. Article 12 of the Infrastructure Regulation).

Within six months, the regulatory authorities must decide on the cost allocation for the project and any impact the costs have on the system charges.

Risk-related incentives

Where project promoters incur higher risks for the development, construction, operation or maintenance of a PCI, compared to the risks normally incurred by a comparable infrastructure project, Article 13(1) of the Infrastructure Regulation stipulates that the member states and national regulatory authorities shall ensure that appropriate incentives are granted to the project.

According to Article 13(6) of the Infrastructure Regulation, each national regulatory authority must publish its methodology and the criteria used to evaluate investments in electricity and gas infrastructure projects and the higher risks incurred by them. 
 

Financing through the Connecting Europe Facility

Certain cross-border projects might have access to CBCA (as explained above) and, in addition, to partial EU financing. Articles 14 and 15 of the Infrastructure Regulation specify which projects are eligible for Union financial assistance, and contain guidance for the award criteria for such assistance. The criteria themselves are laid down in Regulation (EU) No 1316/2013 establishing the Connecting Europe Facility (CEF Regulation). 

In essence, the Infrastructure Regulation specifies the following conditions for projects to be eligible for Union financial assistance:

•    the project-specific cost-benefit analysis provides evidence concerning the existence of significant positive externalities, such as security of supply, solidarity or innovation;
•    the project has received a cross-border cost allocation decision pursuant to the Regulation; and
•    the project is commercially not viable according to the business plan and other assessments carried out, notably by possible investors or creditors or the national regulatory authority.

The body entrusted with administering the Connecting Europe Facility (CEF) is the INEA (Innovation and Networks Executive Agency). The

INEA regularly publishes calls for proposals on their website.

Accelerated permit granting procedure

The Infrastructure Regulation stipulates that the permit granting processes for infrastructure facilities should neither lead to disproportionate administrative burdens nor create barriers to the development of trans-European networks and market access. Barriers to investment are to be identified and removed, including by means of streamlining planning and consultation procedures. PCI permit procedures are to be granted preferential status also at national level, including when it comes to environmental impact analyses, as far as there are corresponding provisions in national law. This priority status is meant to simplify procedures and shorten the duration of proceedings.
In accordance with the Infrastructure Regulation, each member state must designate one national competent authority which is responsible for facilitating and coordinating the permit granting process for PCIs. 

As specified in Article 10 of the Infrastructure Regulation, permit granting is a two-stage process:

(a) The pre-application procedure, covering the period between the start of the permit granting process and the acceptance of the submitted application file by the competent authority. It takes place within an indicative period of two years.

(b) The statutory permit granting procedure, covering the period from the date of acceptance of the submitted application file until the comprehensive decision is taken. This stage must not exceed one and a half years.

Overall, the process should not take more than three and a half years.

Even during the pre-application procedure, the public must be heard, and there are additional obligations on transparency and public participation (Article 9 of the Infrastructure Regulation).

The implementation of these regulations into national law took place by issuing the Energie-Infrastruktur-Gesetz (Energy Infrastructure Act).
 

Transparency and public participation

Once a project is put on the Union list, it is dubbed crucial for the EU's energy policy. Giving projects such priority status is hoped to stop any discussions about their necessity during the permit granting process before they even start. As part of the efforts to speed up permitting procedures, the Infrastructure Regulation also provides particular rules for public participation.

First, the member states (or rather, their competent authorities) drew up a manual of procedures. This must contain information about the applicable law, the necessary decisions and opinions, the contact details of the competent authorities, etc. In the interest of increased transparency, project promoters must hand in a concept for public participation at the beginning of the permit granting process. Before the final and complete application file is handed in, a public consultation must take place. This aims e.g. to identify the most suitable location or trajectory for the infrastructure to be built. As part of this public consultation, an information leaflet is published. Also, project promoters or competent authorities must provide a website that carries relevant information about the project of common interest.