The European Grids Package: building the backbone of Europe's energy transition

Aims and key instruments

The Grids Package seeks to accelerate major cross-border infrastructure projects across the electricity and hydrogen sectors. At the same time, it promotes the more efficient use of existing infrastructure by facilitating grid connections for households and producers.

The Grids Package includes the following key instruments:

• Proposal for a Trans-European Network for Energy Regulation repealing Regulation (EU) 2022/869 (COM(2025) 1006 final) ("TEN‑E Regulation")
  
• Proposal for a Directive to accelerate permit‑granting procedures for infrastructure projects amending the Renewable Energy Directive, Electricity Market Directive, and Gas and Hydrogen Market Directive (COM(2025) 1007 final)
  
• Guidance on efficient grid connections (C(2025) 8473 final)

Future-proof financing of infrastructure

Grid operation and expansion are primarily financed through tariffs paid by grid users. To meet future financing needs – estimated at EUR 1.2 trillion for electricity grids and EUR 240bln for hydrogen grids by 2040 – the EC is adjusting financing rules and mobilising additional funding sources.

The proposed TEN-E Regulation continues to fast‑track the approval and financing of Projects of Common Interest ("PCIs"), such as the SoutH2 Corridor, a dedicated hydrogen pipeline connecting North Africa with Italy, Austria and Germany. PCIs remain eligible under the Connecting Europe Facility - Energy ("CEF‑E"). The EC has also announced plans to increase the CEF‑E budget in the next Multiannual Financial Framework (2028 – 2024).

To ensure fair cost sharing, national regulatory authorities in Member States where at least 10 % of a PCI's estimated benefits occur must participate in cross‑border cost allocation. In addition, Operators of Electricity Transmission Systems ("TSOs") are required to allocate 25 % of their remaining congestion income to PCI‑related investments that reduce interconnector congestion, helping to limit pressure on grid tariffs.

To mobilise private capital, the EC plans to propose a Clean Energy Investment Strategy with measures to attract private‑sector investment. To improve the bankability of hydrogen projects, the EC is also assessing the use of contracts for difference and enhanced cross‑border coordination of regulatory tools.

Streamlining permitting procedures

Lengthy permitting procedures remain a major obstacle to the timely deployment of energy infrastructure. To streamline and accelerate approvals for grid infrastructure, renewable energy installations and storage projects, the EC proposes targeted measures.

Until climate neutrality is achieved, the construction and operation of transmission and distribution grids are deemed to be in the overriding public interest and to serve public health and safety. In balancing competing legal interests, grid projects should therefore generally take precedence. This approach is also reflected in Austria's draft Renewable Energy Expansion Acceleration Act.

Developers of renewable energy plants with an installed capacity above 10 MW will be required to share project benefits with affected local communities. This may include financial participation, cooperation with energy communities or direct financial contributions. In addition, developers must appoint and finance an independent third-party facilitator to support public dialogue. These measures aim to increase local acceptance and reduce permitting resistance.

In zoning and planning, Member States should avoid legally or de facto excluding large areas from renewable energy and related infrastructure development on environmental or landscape protection grounds, unless irreversible damage can be demonstrated.

Accelerating grid connection

Grid connection remains a challenge across Member States, with long backlogs of unprocessed applications. To address this, the EC proposes short‑term measures to enable faster connections for renewable generation and electrified loads by making better use of existing grids.

New EC guidance on efficient grid connections provides a practical toolbox to reduce queue times. It calls for transparent and up-to-date capacity maps, locationally differentiated connection tariffs, and a shift from a "first‑come, first‑served" to a "first‑ready, first-served" approach. The EC guidance on efficient grid connections also supports reallocation of unused reserved capacity and the enforcement of milestones under a "use‑it‑or‑lose‑it" principle. Notably, most of these connection rules concepts are already reflected in the current regulatory framework in Austria. For instance, Austria's new Electricity Industry Act (ElWG) provides for locationally differentiated connection charges. However, under the new ElWG, the regulatory authority E-Control has the right to design the content of the general terms and conditions for grid connection and access to electricity distribution grids by way of a regulation. It can be expected that E-Control will aim at further alignment with the EC guidance on efficient grid connections.

authors: Bernd Rajal, Patrick Barabas